SINGAPORE — Gold added to overnight gains on
Wednesday on a softer dollar and heightened tension after Turkey shot
down a Russian warplane, but the rally was capped on the expectation of a
US rate hike in December.
Turkey shot down the Russian jet near
the Syrian border on Tuesday, saying the plane had violated its air
space, in one of the most serious publicly acknowledged clashes between a
North Atlantic Treaty Organisation (Nato) member country and Russia for
half a century. US President Barack Obama and French President François
Hollande, meeting in Washington, urged against an escalation, while
Nato secretary-general Jens Stoltenberg said the military alliance stood
in solidarity with Turkey. The tension triggered a sell-off in equities
and the dollar, while boosting the safe-haven yen, gold and government
debt.
Spot gold edged up 0.4% to $1,078.72/oz by 3.31am GMT, following a 0.6% gain on Tuesday. US gold rose 0.5%, after an almost 1% gain in the previous session.
"Gold rose on flight-to-quality as investors sought protection from volatile financial markets in the wake of global stresses," said HSBC analyst James Steel.
"While we think gold may be supported, we are not anticipating a robust rally, and look for only moderate gains, with a lot of upside resistance," he said.
Despite the gains, gold was not too far from a near-six-year low of $1,064.95 hit last week on the increasing expectation that the Federal Reserve will hike US rates in December for the first time in nearly a decade. Gold tends to benefit from ultra-low US rates, which lower the opportunity cost of holding nonyielding bullion.
Data on Tuesday supported views of a December rate hike. The US economy grew at a healthier clip in the third quarter than initially thought. Traders will be eyeing more US data due later on Wednesday, including weekly jobless claims and October new home sales, to gauge the strength of the economy. Liquidity, however, could be thin ahead of the US Thanksgiving holiday on Thursday.
Among other precious metals, silver rose for a second session after dipping to a six-year low of $13.86 earlier this week, while platinum was trading just above a seven-year low.
Silver was up 3c or 0.21% at $14.23, platinum added $4 or 0.48% to $844 and palladium gained $1.33 or 0.25% to $537.05.
Reuters
Spot gold edged up 0.4% to $1,078.72/oz by 3.31am GMT, following a 0.6% gain on Tuesday. US gold rose 0.5%, after an almost 1% gain in the previous session.
"Gold rose on flight-to-quality as investors sought protection from volatile financial markets in the wake of global stresses," said HSBC analyst James Steel.
"While we think gold may be supported, we are not anticipating a robust rally, and look for only moderate gains, with a lot of upside resistance," he said.
Despite the gains, gold was not too far from a near-six-year low of $1,064.95 hit last week on the increasing expectation that the Federal Reserve will hike US rates in December for the first time in nearly a decade. Gold tends to benefit from ultra-low US rates, which lower the opportunity cost of holding nonyielding bullion.
Data on Tuesday supported views of a December rate hike. The US economy grew at a healthier clip in the third quarter than initially thought. Traders will be eyeing more US data due later on Wednesday, including weekly jobless claims and October new home sales, to gauge the strength of the economy. Liquidity, however, could be thin ahead of the US Thanksgiving holiday on Thursday.
Among other precious metals, silver rose for a second session after dipping to a six-year low of $13.86 earlier this week, while platinum was trading just above a seven-year low.
Silver was up 3c or 0.21% at $14.23, platinum added $4 or 0.48% to $844 and palladium gained $1.33 or 0.25% to $537.05.
Reuters
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