- Gold does not see safe-haven demand after deadly incidents
- Markets look to possible U.S. rate hikes next year
- SPDR Gold holdings down over 12 pct since November
- Palladium touches lowest in over month
Gold fell on Tuesday after deadly incidents in Germany and Turkey failed to spur safe-haven buying, with markets focused on the possibility of further U.S. interest rate hikes next year.
The Russian ambassador to Turkey was shot in the back and killed as he gave a speech at an Ankara art gallery on Monday by an off-duty police officer.
Later, a truck ploughed into a crowded Christmas market in central Berlin, killing 12 people and injuring 48 others in what the city’s police have said was a suspected terrorist attack.
Optimistic remarks on the U.S. labour market by Federal Reserve Chair Janet Yellen strengthened the possibility of further rate hikes next year.
“In the absence of any major U.S. macro numbers scheduled to be released on Tuesday, we do not expect to see gold doing much of anything over the short-term,” INTL FCStone analyst Edward Meir said in a note.
Gold needs to see signs of economic instability to push up, but that is unlikely in the current environment of rising global equity markets, stronger U.S. growth and a firmer dollar, Meir added.
The dollar index, which measures the greenback against a basket of currencies, was up 0.2 percent at 103.390.
Spot gold had fallen half a percent to $1,133.10 an ounce by 0656 GMT, after closing up in the two previous sessions.
U.S. gold futures dropped 0.7 percent to $1,135.20 per ounce.
“The current economic scenario favours investments into assets offering higher yields,” said Mihir Kapadia, CEO of London-based Sun Global Investments Ltd. “As the Fed is projecting three interest rate hikes in 2017, gold prices will remain turbulent and susceptible to rising interest rates and bond yields.”
Rising interest rates lower demand for non-interest-paying bullion.
“The economic data coming out of the U.S. could push prices down. But, the physical demand has been phenomenal. So, it can’t get too much lower with the kind of demand we are seeing,” said Janie Simpson, managing director at ABC Bullion.
A bounce target at $1,153 per ounce has been temporarily aborted for spot gold as it seems to have lost momentum after breaking resistance at $1,137, according to Reuters technical analyst Wang Tao.
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.06 percent to 828.10 tonnes on Monday. Holdings are down over 12 percent since November.
Meanwhile, spot silver dipped 1.4 percent to $15.74 an ounce. Platinum was 0.4-percent lower at $912.70.
Palladium fell for the fifth straight session, down 0.9 percent at $670.73. The metal touched a low of $670.22, its weakest since Nov. 14.
Source: Reuters UK