Moneycontrol
Dec 22, 2015 10:50 AM IST | Source: Reuters

Gold keeps gains from two-day rally on weaker dollar

Spot gold was little changed at USD 1,077.60 an ounce by 0047 GMT, after gaining 2.5 percent in the last two sessions

Gold keeps gains from two-day rally on weaker dollar

Gold retained gains from a two-day rally on Tuesday supported by a slide in the dollar, but a slump in oil prices and uncertainty over the pace of future US interest rate hikes capped the metal's advance.


FUNDAMENTALS


* Spot gold was little changed at USD 1,077.60 an ounce by 0047 GMT, after gaining 2.5 percent in the last two sessions.


* The metal got a boost on Monday as the dollar fell after data from the Chicago Federal Reserve suggested the U.S. economy grew at a below average pace in November before the Federal Reserve raised interest rates last week.


* A softer greenback makes dollar-denominated gold cheaper for holders of other currencies.


* A dip in crude oil to its lowest levels since 2004 was seen hurting gold's ascent in the near term as lower prices could ignite deflation fears. Bullion is often seen as a hedge against oil-led inflation.


* Also weighing on the metal was the outlook for U.S. rates, following the Fed's first rate hike in nearly a decade last week. Janet Yellen, who chairs the rate-setting Federal Open Market Committee, made clear future increases would be gradual.


* The Fed's promise of gradual rate hikes in coming months means the central bank will not raise rates at every meeting, Atlanta Fed President Dennis Lockhart said on Monday. The more probable pace of upcoming hikes "will be more like every other meeting," he said.


* Investors fear higher rates could dent demand for non-interest-paying gold.


* Assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 645.94 tonnes on Monday, near a seven-year low.


* At least 13 people died when an old gold mine they were working in collapsed in eastern Guinea, a local official said on Monday.


* Gold producer Randgold Resources said on Monday it was pulling out of a joint venture with AngloGold Ashanti to redevelop AngloGold's Obuasi mine, in a decision that could spell closure for one of Ghana's most important mines.


MARKET NEWS

* Asian shares took solace from gains on Wall Street and edged higher on Tuesday, though gains were capped by caution over low share trade volume and plunging Brent crude oil prices ahead of this week's holidays.

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