Gold briefly rose on Monday to its highest in a week at $1,097.90 an
ounce after the attacks prompted a flight to safety among investors, but
it failed to maintain those gains.
The metal is now coming under
pressure from expectations that the US Federal Reserve is set to raise
US interest rates for the first time in nearly a decade, lifting the
opportunity cost of holding non-yielding gold while boosting the dollar.
Spot
gold was down 0.2% at $1,080.71/oz at 10.32am GMT, while US gold
futures for December delivery were down $3.30/oz at $1,080.30.
It is slipping back towards last week’s low of $1,074.26/oz, its weakest since February 2010.
"We
think gold could go to $1,050 an ounce, if the Fed goes ahead with a
rate hike in December," Capital Economics analyst Simona Gambarini said.
"That’s the main driver of the gold price, and the reason why we’ve retraced to these levels.
Global
shares rose sharply on Tuesday, clawing back all the ground lost the
previous day as investors bet that the attacks on Paris would have
little lasting impact on the economy.
European stocks rose more
than 2%. As the initial shock of the attacks abated, investors once
again focused their attention on the prospect of diverging monetary
policy, with the US set to tighten and the eurozone expected to loosen
policy.
That has led to gains in the dollar, which hit a seven-month high against the euro on Tuesday.
"We
believe that gold will face further headwinds in the next few weeks as
an extension of eurozone quantitative easing is announced in December,
thus pushing up the dollar against the euro and other major currencies,
and as the market fully prices in a mid-December Fed rate rise,"
Mitsubishi said in a note.
Among other precious metals, silver and
platinum were both up 0.4% at $14.28/oz and $863.75/oz, respectively.
Palladium was down 0.7% at $544.10/oz.
Platinum was extending
gains for a second day, after snapping 12 days of losses on Monday. The
metal, however, remains near Monday’s near seven-year low of $851/oz.
Reuters
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