Moneycontrol
Dec 24, 2015 12:42 PM IST | Source: Reuters

Gold edges up after two-day drop in pre-holiday trade

Spot gold rose 0.2 percent to USD 1,072.10 an ounce by 0037 GMT, after losing 0.7 percent in the last two sessions.

Gold edges up after two-day drop in pre-holiday trade

Gold rose only slightly on Thursday, after two days of losses, as the metal struggled to find direction in thin pre-holiday trade amid conflicting cues from the currency, equities and energy markets.


FUNDAMENTALS


* Spot gold rose 0.2 percent to USD 1,072.10 an ounce by 0037 GMT, after losing 0.7 percent in the last two sessions.


* Many financial centres around the world will shut early on Thursday and stay closed on Friday for the Christmas holidays. Some will remain shut on Monday.


* On Wednesday, Wall Street rallied, US Treasury yields rose and the dollar edged up after a three-day losing streak.


* Strong equities and dollar typically suppress demand for safe-haven gold.


* But the metal found some support in the energy markets, as oil rose more than 3 percent on Wednesday following a drop to multi-year lows earlier in the week.


* Gold is positively correlated to oil as the metal is seen as a hedge against oil-led inflation.


* Mixed US economic data also did not help gold find direction.


* New orders for US manufactured capital goods fell in November and the prior month's increase was revised sharply lower. But other data on Wednesday showed consumer sentiment at a five-month high in December and personal income rising for an eighth straight month in November.


* Gold prices have shed 9 percent so far this year, a third year of losses, mostly due to expectations the US Federal Reserve would raise interest rates, which it did this month.


* With the first US rate increase in nearly a decade out of the way, the focus is now on the pace of future hikes.


MARKET NEWS

* The dollar, euro and yen got off to a subdued start on Thursday in what is likely to be a languid session with much of the Western world already shuttered for the Christmas and year-end holidays.

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