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Gold edged higher on Tuesday after falling more than 2 per cent the session before in its deepest slide in over a year following a sustained slump in oil prices.
Spot gold was up 0.3 per cent at $1,196.10 an ounce by 0035 GMT. The precious metal lost 2.5 per cent on Monday, giving up all of last week’s gains as oil prices tumbled to fresh 5-1/2-year lows, cutting’s gold’s draw as a hedge against oil-fuelled inflation.
Biggest drop
Monday’s drop was the biggest for spot gold in a single day since December 2, 2013.
US gold for delivery in February slipped 0.9 per cent to $1,197 an ounce, stretching losses to a fifth session.
Fed policy meet
Apart from oil, investors are eyeing the Federal Reserve’s two-day policy meeting which kicks off on Tuesday for clues on the timing of an increase in US interest rates.
Signs of strength in the US economy have raised expectations that the central bank will hike interest rates next year which could weigh on gold, a non-interest bearing asset.
US manufacturing output recorded its largest increase in nine months in November, joining bullish employment and retail sales reports in suggesting strength in the economy.
Russia’s central bank raised its key interest rate to 17 per cent from 10.5 percent in an emergency move to halt a collapse in the rouble as oil prices decline and the country’s sanctions-hit economy slides toward recession.
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