Gold eases as firm dollar, weak oil dent safe-haven appeal

Reuters Updated - March 12, 2018 at 08:59 PM.

gold

Gold gave up some of its overnight gains on Tuesday as the dollar recovered from losses and oil prices weakened, dampening the metal’s appeal as a hedge.

Spot gold had slipped 0.2 per cent to $1,200.26 an ounce by 0036 GMT.

Gold jumped more than 1 per cent on Monday on a brief surge of late-day technical buying as it breached the $1,200-per-ounce level long after the US dollar dropped from a more than five-year high.

Strong dollar

But the dollar recovered on Tuesday and was higher against a basket of major currencies.

A stronger greenback makes dollar-denominated gold more expensive for the holders of other currencies and also decreases its appeal as an alternative investment.

Softer oil prices have also hurt gold’s appeal as a hedge against oil-led inflation. Oil slumped to fresh five-year lows on Monday.

SPDR Gold Trust

Investor sentiment has been largely bearish. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.25 per cent to 719.12 tonnes on Monday.

Cues for the day will also come from US economic data that would indicate strength of the recovery and how soon the Federal Reserve could increase rates.

Strong data and higher rates could provide a further boost to the dollar and hurt non-interest-bearing bullion.

In gold mining news, Zijin Mining Group Co Ltd , China’s largest listed gold producer, is buying nearly a 10 per cent stake in Pretium Resources Inc, a small Canadian miner developing one of the highest grade gold finds in recent times.

Published on December 9, 2014 04:45