Gold slightly rebounds from a 6-week low
Precious-Gold inclined slightly on Tuesday as the dollar slipped and oil surged, enhancing the appeal of gold as an alternative investment and inflation hedge.
The previous day, gold shed $21.10 or 1.90% to close at $1093.20 an ounce. Gold Prices were setin London on Monday at $1105.50 per ounce declining from $1113.25 per ounce during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, soared to 1,132.70 metric tons on December 21.
Gold prices lost 11% since reaching its highest level this month as the dollar rebounded on signs of economic recovery in the U.S. Since the release of the NFP report the green currency started to move in line with the U.S. data and left the role of safe haven solely to the Japanese yen. Thus the dollar's incline curbed demand on gold, causing it to fall below $1100.
Analysts expect gold may drop further in the coming period as it breached the strong support at $1100 and the U.S. dollar may strengthen more in the coming period as the U.S. economy is estimated to expand 2.5% next year. However, the yellow metal might get support from oil or fears of high inflation rates as economies recover.
Today, the greenback plunged to 77.90 from the day's opening at 78.10, as indicated by the dollar index. The U.S. dollar has breached resistance at 77.80 but it did a downside correction today before continuing its rise again. Eyes will be on the U.S. GDP for the third quarter final reading which will be due later on today.
On the other hand, oil inclined close to $74 a barrel ahead of the OPEC meeting today in Angola, where members of the oil cartel are expected to keep production unchanged.
Currently, gold is traded at $1096.20 an ounce recording a high of $1097.30 and a low of $1091.30.