Gold rises in thin trade; eyes 2nd straight weekly drop
Singapore (Dec 26) Gold gained 1 percent in thin post-Christmas trading on Friday as the dollar slipped against a basket of major currencies, but the metal was headed for a second straight weekly drop, underscoring the bearishness in the market.
Spot gold gained 1 percent to $1,186.05 an ounce by 0711 GMT, moving away from a three-week low of $1,170.17 hit earlier in the week.
Liquidity was thin as key markets in the region such as Australia, Hong Kong and Singapore were closed on Friday. The U.K. market will remain closed, although New York will be open.
"The weaker dollar probably attracted some bids but volumes are really low and this rally might not last once everyone is back from the holidays," said a precious metals trader in Singapore.
The dollar index was 0.1 percent lower after climbing to a near nine-year peak earlier this week.
Premiums in Singapore have dropped to between 80 cents and
$1 an ounce over the global benchmark, from about $1.50 two
weeks ago, traders said.
"Trading volumes between Christmas and the New Year can be
notoriously thin. In a low-volume climate, bullion prices can
move sharply in either direction on even light investor
purchases or sales," HSBC analysts had said in a note this week.
Despite Friday's gain, the metal has lost about 1 percent
for the week.
Bullion lost ground after data showed the U.S. economy grew
in the third quarter at its quickest pace in 11 years. Other
data showed initial claims for state unemployment benefits
dropped for the fourth straight week.
Strong data decreases gold's appeal as a safe-haven asset
and increases expectations of an interest rate hike in the
A higher dollar makes gold more expensive for holders of
other currencies. An increase in rates is also seen to dull
demand for non-interest-bearing bullion.
Among other precious metals, silver was on track for
a second straight weekly decline, while palladium and
platinum were headed for weekly gains.