* Gold steady after gaining 2.5 pct in the last two sessions
* SPDR fund sees some outflow after massive jump last week
* Oil near 11-year lows, to hurt gold's appeal as inflation
hedge
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 22 (Reuters) - Gold retained gains from a
two-day rally on Tuesday, supported by a slide in the dollar,
although a slump in oil prices and uncertainty over the pace of
future U.S. interest rate hikes capped the metal's advance.
While prices drew support from a big rise in assets of the
top gold exchange-traded fund (ETF) late last week, a resumption
in outflows this week indicated investors remained cautious.
Spot gold XAU= was little changed at $1,079.20 an ounce by
0648 GMT, after gaining 2.5 percent in the last two sessions.
The metal got a boost on Monday as the dollar fell after data
from the Chicago Federal Reserve suggested the U.S. economy grew
at a below average pace in November. USD/
"The jump in gold-ETF demand is impressive after the string
of losses over the past couple of years, but the market will
likely need to see further accumulation for the rally to be
extended," said HSBC analyst James Steel.
"A major stumbling block for a further gold rally is oil,
and commodity prices in general," he said, adding that oil is a
powerful drag on gold.
Crude oil slid to its lowest levels since 2004 on Monday and
more declines could ignite deflation fears. Bullion is often
seen as a hedge against oil-led inflation. O/R
SPDR Gold Trust GLD , the world's top gold ETF, saw its
assets rise by nearly 19 tonnes on Friday, the first increase in
two months and the biggest in four years. But that was followed
by outflows of three tonnes on Monday. GOL/ETF
Holdings of the fund had hit a seven-year low earlier in the
month, as investors positioned themselves for higher interest
rates in the United States.
While persistent inflows into the fund can boost gold
prices, a further slump in oil could undermine any rally.
Also in focus was the pace of the Fed's future rate hikes.
The Fed last week raised U.S. interest rates for the first time
in nearly a decade. Investors fear higher rates could dent
demand for non-interest-paying gold, while boosting the dollar.
The Fed's promise of gradual rate hikes in coming months
means the central bank will not raise rates at every meeting,
Atlanta Fed President Dennis Lockhart said on Monday. The more
probable pace of upcoming hikes "will be more like every other
meeting," he said.
PRICES AT 0648 GMT
Metal Last Change Pct chg
Spot gold 1079.2 1.14 0.11
Spot silver 14.25 -0.013 -0.09
Spot platinum 874.45 1.55 0.18
Spot palladium 548.4 -0.65 -0.12
Comex gold 1079.1 -1.5 -0.14
Comex silver 14.255 -0.06 -0.42
COMEX gold and silver contracts show the
most active months
* SPDR fund sees some outflow after massive jump last week
* Oil near 11-year lows, to hurt gold's appeal as inflation
hedge
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 22 (Reuters) - Gold retained gains from a
two-day rally on Tuesday, supported by a slide in the dollar,
although a slump in oil prices and uncertainty over the pace of
future U.S. interest rate hikes capped the metal's advance.
While prices drew support from a big rise in assets of the
top gold exchange-traded fund (ETF) late last week, a resumption
in outflows this week indicated investors remained cautious.
Spot gold XAU= was little changed at $1,079.20 an ounce by
0648 GMT, after gaining 2.5 percent in the last two sessions.
The metal got a boost on Monday as the dollar fell after data
from the Chicago Federal Reserve suggested the U.S. economy grew
at a below average pace in November. USD/
"The jump in gold-ETF demand is impressive after the string
of losses over the past couple of years, but the market will
likely need to see further accumulation for the rally to be
extended," said HSBC analyst James Steel.
"A major stumbling block for a further gold rally is oil,
and commodity prices in general," he said, adding that oil is a
powerful drag on gold.
Crude oil slid to its lowest levels since 2004 on Monday and
more declines could ignite deflation fears. Bullion is often
seen as a hedge against oil-led inflation. O/R
SPDR Gold Trust GLD , the world's top gold ETF, saw its
assets rise by nearly 19 tonnes on Friday, the first increase in
two months and the biggest in four years. But that was followed
by outflows of three tonnes on Monday. GOL/ETF
Holdings of the fund had hit a seven-year low earlier in the
month, as investors positioned themselves for higher interest
rates in the United States.
While persistent inflows into the fund can boost gold
prices, a further slump in oil could undermine any rally.
Also in focus was the pace of the Fed's future rate hikes.
The Fed last week raised U.S. interest rates for the first time
in nearly a decade. Investors fear higher rates could dent
demand for non-interest-paying gold, while boosting the dollar.
The Fed's promise of gradual rate hikes in coming months
means the central bank will not raise rates at every meeting,
Atlanta Fed President Dennis Lockhart said on Monday. The more
probable pace of upcoming hikes "will be more like every other
meeting," he said.
PRICES AT 0648 GMT
Metal Last Change Pct chg
Spot gold 1079.2 1.14 0.11
Spot silver 14.25 -0.013 -0.09
Spot platinum 874.45 1.55 0.18
Spot palladium 548.4 -0.65 -0.12
Comex gold 1079.1 -1.5 -0.14
Comex silver 14.255 -0.06 -0.42
COMEX gold and silver contracts show the
most active months