(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Jan 6 (Reuters) - Gold rallied for a third
session in a row on Wednesday, paring earlier losses as
investors sought safety in the metal amid escalating tensions in
the Korean peninsula and the Middle East, and worries over the
Chinese economy.
Traders, however, said gold's safe-haven rally was not as
strong as they had expected given the geopolitical uncertainties
and a softer dollar.
Spot gold XAU= rose 0.3 percent to $1,080.60 an ounce by
0700 GMT, after earlier slipping 0.3 percent. Gold has gained
1.6 percent in the last two sessions, after touching a four-week
high of $1,083.30 on Monday.
"It is supposed to be a risk-off trade but gold is actually
struggling at the moment," said a precious metals trader in Hong
Kong. "It should have reacted more aggressively."
Gold prices could retreat as the metal has failed to hold
above Monday's $1,083-level, he added.
Bullion is often seen as an alternative investment during
times of geopolitical and financial uncertainty, although
safe-haven rallies tend to be short-lived.
North Korea said it successfully tested a miniaturised
hydrogen nuclear device on Wednesday, claiming a significant
advance in the isolated state's strike capability and setting
off alarm bells in Japan and South Korea.
Relations between Saudi Arabia and Iran collapsed over the
weekend after the Kingdom's execution of a Shi'ite cleric, a
prominent critic of Saudi policy, set off a storm of protests in
Tehran.
The yen, also seen as a safe-haven, vaulted to a near
three-month high against the dollar and multi-month highs versus
other currencies on Wednesday. USD/
Asian stocks fell on Wednesday as Beijing continued guiding
the yuan lower and a survey pointed to weakness in China's
services sector. MKTS/GLOB
"The metal wants to go higher but has run into a couple of
technical resistance levels," said ScotiaMocatta analysts,
adding that the next support levels were at $1,070 and $1,063.
Gold's gains were also limited by a slide in oil prices to
11-year lows on Tuesday. The yellow metal is seen as a hedge
against oil-led inflation. O/R
A further decline in equity markets and a weakening of the
dollar could prompt investors to channel money towards gold.
Bullion slid 10 percent last year on fears higher U.S. rates
would lower demand for the non-interest-paying asset.
The Federal Reserve raised U.S. rates for the first time in
nearly a decade last month. It is expected to hike rates further
this year.
The U.S. central bank will release the minutes of its
December policy meeting later on Wednesday. Traders will examine
the minutes for clues about the Fed's rate hike path.
PRICES AT 0700 GMT
Metal Last Change Pct chg
Spot gold 1080.6 3.34 0.31
Spot silver 13.95 -0.01 -0.07
Spot platinum 884 -4.4 -0.5
Spot palladium 527 -7.31 -1.37
Comex gold 1079.8 1.4 0.13
Comex silver 13.945 -0.026 -0.19
COMEX gold and silver contracts show the
most active months
By A. Ananthalakshmi
SINGAPORE, Jan 6 (Reuters) - Gold rallied for a third
session in a row on Wednesday, paring earlier losses as
investors sought safety in the metal amid escalating tensions in
the Korean peninsula and the Middle East, and worries over the
Chinese economy.
Traders, however, said gold's safe-haven rally was not as
strong as they had expected given the geopolitical uncertainties
and a softer dollar.
Spot gold XAU= rose 0.3 percent to $1,080.60 an ounce by
0700 GMT, after earlier slipping 0.3 percent. Gold has gained
1.6 percent in the last two sessions, after touching a four-week
high of $1,083.30 on Monday.
"It is supposed to be a risk-off trade but gold is actually
struggling at the moment," said a precious metals trader in Hong
Kong. "It should have reacted more aggressively."
Gold prices could retreat as the metal has failed to hold
above Monday's $1,083-level, he added.
Bullion is often seen as an alternative investment during
times of geopolitical and financial uncertainty, although
safe-haven rallies tend to be short-lived.
North Korea said it successfully tested a miniaturised
hydrogen nuclear device on Wednesday, claiming a significant
advance in the isolated state's strike capability and setting
off alarm bells in Japan and South Korea.
Relations between Saudi Arabia and Iran collapsed over the
weekend after the Kingdom's execution of a Shi'ite cleric, a
prominent critic of Saudi policy, set off a storm of protests in
Tehran.
The yen, also seen as a safe-haven, vaulted to a near
three-month high against the dollar and multi-month highs versus
other currencies on Wednesday. USD/
Asian stocks fell on Wednesday as Beijing continued guiding
the yuan lower and a survey pointed to weakness in China's
services sector. MKTS/GLOB
"The metal wants to go higher but has run into a couple of
technical resistance levels," said ScotiaMocatta analysts,
adding that the next support levels were at $1,070 and $1,063.
Gold's gains were also limited by a slide in oil prices to
11-year lows on Tuesday. The yellow metal is seen as a hedge
against oil-led inflation. O/R
A further decline in equity markets and a weakening of the
dollar could prompt investors to channel money towards gold.
Bullion slid 10 percent last year on fears higher U.S. rates
would lower demand for the non-interest-paying asset.
The Federal Reserve raised U.S. rates for the first time in
nearly a decade last month. It is expected to hike rates further
this year.
The U.S. central bank will release the minutes of its
December policy meeting later on Wednesday. Traders will examine
the minutes for clues about the Fed's rate hike path.
PRICES AT 0700 GMT
Metal Last Change Pct chg
Spot gold 1080.6 3.34 0.31
Spot silver 13.95 -0.01 -0.07
Spot platinum 884 -4.4 -0.5
Spot palladium 527 -7.31 -1.37
Comex gold 1079.8 1.4 0.13
Comex silver 13.945 -0.026 -0.19
COMEX gold and silver contracts show the
most active months