(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Nov 11 (Reuters) - Gold ticked up on Wednesday as
the dollar pared some of its recent gains, but the metal
remained under pressure near a three-month low as outflows from
bullion funds and an anticipated U.S. rate hike weighed on the
market.
Assets in SPDR Gold Trust GLD , the top gold-backed
exchange-traded fund (ETF), fell to 663.43 tonnes on Tuesday -
the lowest since September 2008 when Lehman Brothers filed for
bankruptcy kicking off a global financial crisis.
Investors have been pulling out of bullion funds on
increasing bets the U.S. Federal Reserve would raise interest
rates this year. Bullion as a non-interest-paying asset could
take a hit to demand with higher rates.
"The ETF market is suggesting more pain (for gold) in coming
days," ANZ analysts said in a note.
Spot gold XAU= rose 0.2 percent to $1,091.55 an ounce by
0635 GMT. The dollar index .DXY fell 0.3 percent after hitting
a seven-month high in the previous session.
But the metal was within striking distance of $1,084.90
reached on Friday, the lowest since Aug. 7, after a robust U.S.
nonfarm payrolls report boosted bets the Fed would hike interest
rates at its next meeting in December.
The employment report released last week has strengthened
the conviction of economists who have been forecasting a
December interest rate increase, according to a Reuters poll
published on Tuesday.
The survey of over 80 leading economists found a 70 percent
median chance the U.S. central bank would raise its short-term
lending rate at its final meeting of the year, next month.
The technical picture for gold is weak, and the next support
is at the 5-1/2-year trough of $1,077 an ounce hit in July,
analysts have said.
"A looser ECB and tighter Fed may not be entirely priced
into gold and we could see further downside. Still, we sense
sellers may be puttering out of momentum," said HSBC analyst Jim
Steel, adding that physical demand from Asia could be
increasing.
Reuters reported exclusively on Monday that a consensus was
forming at the European Central Bank to cut the deposit rate
further, to weaken the euro and push inflation.
Gold's recent sharp decline has stoked some physical demand
in top consumer Asia. Premiums on the Shanghai Gold Exchange, an
indicator of demand in China, were at a healthy $4-$5 an ounce
on Wednesday.
Sustained physical demand could provide a floor for
declining gold prices.
PRICES AT 0635 GMT
Metal Last Change Pct chg
Spot gold 1091.55 2.04 0.19
Spot silver 14.5 0.09 0.62
Spot platinum 898 -0.5 -0.06
Spot palladium 595.5 0.53 0.09
Comex gold 1091.3 2.8 0.26
Comex silver 14.45 0.094 0.65
COMEX gold and silver contracts show the
most active months