Gold gains as dollar rally stalls, geopolitical risks buoy
New York (Aug 26) Gold rose on Tuesday after a pause in the dollar rally prompted chart-based buying, but pared gains as European stimulus hopes and strong U.S. data pushed investors to equities.
Spot gold hit a session high at $1,290.80 an ounce in early trade as stop orders were triggered on a break of the 200-day moving average just above $1,280. The contract was up 0.6 percent at $1,283.57 by 2:26 p.m. EDT.
December U.S. gold futures closed up $6.30, or 0.5 percent, at $1,285.20 an ounce.
Bullion continued to track the U.S. dollar. A stronger greenback weighs on dollar-traded commodities, making them more expensive to holders of other currencies.
"The dollar's rally has started to stall. That has helped gold out a bit," said Stephen Platt, an analyst at futures brokerage Archer Financial Services.
Prices have been lifted by short-covering due to technical support near a two-month low of $1,273.06 set on Thursday amid speculation of an eventual increase in U.S. interest rates.
Worries over geopolitical risk due to tensions between Russia and Ukraine, as well as violence in the Middle East, underpinned. Gold is usually seen as an insurance against financial and political risk.
Bullion pared the day's gains as hopes of more stimulus from the European Central Bank and positive U.S. data boosted buying in global equities. The benchmark S&P 500 hit a fresh record above 2,000.
The Conference Board's measure of U.S. consumer confidence rose more than expected in August, hitting its highest level since October 2007. Separately, orders for long-lasting U.S. manufactured goods posted their biggest gain on record in July.
Data released late Monday added to potential support, showing that Russia hiked its gold holdings for a fourth straight month in July.
Demand support was otherwise limited. Physical buying from jewellers in Asia, which had moderately re-emerged amid last week's price drop, dried up on Tuesday.
Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, however, fell 0.4 percent to 797.09 tonnes on Monday from 800.08 tonnes on Friday.
Premiums for gold bars in Hong Kong rose to 70 cents to $1.10 to the spot London prices, higher than the 50 cents to $1.00 quoted late last week. In Singapore, premiums were steady at 80 cents to $1 an ounce to spot London prices.
Silver rose on gold's coattails. It was up 0.4 percent to $19.41 an ounce, climbing further from Thursday's two-month low of $19.25.
Spot platinum, which touched its lowest level since May 5 at $1,407.30 last week, was up 0.1 percent at $1,412.25 an ounce, while spot palladium was down 0.6 percent at $882.75 an ounce.