Gold rises 1 pct as firmer oil brings back investors
London (Dec 3) Gold rose 1 percent above $1,200 an ounce on Wednesday, boosted by firmer oil prices that prompted investors to shuffle positions in volatile trading.
The metal had fallen to a near three-week low on Monday after Switzerland voted against a proposal to boost its gold reserves. It then managed to recover to its highest in a month, as oil prices moved up from a five-year low.
"There is less appetite for selling the metal ... we are seeing the dollar rising, stock markets up, U.S. yields stronger but gold is still well supported and that comes back to what happened on Monday, when a lot of stop loss buying was triggered," Saxo Bank senior manager Ole Hansen said.
Spot gold rose to a session high of $1,211.50 an ounce and was up 0.9 percent at $1,209.84 by 1532 GMT. It had fallen 1 percent in the previous session on a bouncing dollar and diving crude prices.
The SPDR Gold Trust, the world's top gold-backed exchange-traded fund, saw inflows of 2.4 tonnes on Tuesday.
Gold gained about 10 percent in the first half of the year, helped by geopolitical tensions and disappointing U.S. economic data, before surrendering to a rallying dollar and expectations of interest rate rises.
Investors would be encouraged to withdraw more money from non-interest-bearing assets such as gold if rates rise sooner than expected.
"The key drivers in the medium to longer term are the recovering U.S. economy and expected rate hikes next year, which should dent investor demand for gold," Julius Baer analyst Carsten Menke said.
Wednesday's gains were kept in check by a firmer dollar, which rose to its highest in more than 5-1/2 years against a basket of currencies, while U.S. yields and European shares also increased.
"We expect the gold price to remain under pressure initially in the first half of next year on the back of growing speculation about increasingly imminent interest rate hikes in the United States," Commerzbank said in a note.
It sees gold falling to $1,125 on average in the second quarter of 2015 but expects it to climb to $1,250 by the end of the year as the pressure abates.
Platinum rose 1.1 percent to $1,223.50 an ounce. Silver was up 0.2 percent at $16.47 an ounce and palladium rose 0.3 percent to $801.22 an ounce.