Gold edges up after falling to 10-month lows

BENGALURU: Gold inched up on Tuesday as bargain-hunters moved in after prices touched their lowest in 10 months the session before, but a possible US rate hike as early as next week capped gains.

“With a Fed rate hike approaching, the whole market is just waiting for that,” said Jiang Shu, chief analyst at Shandong Gold Group.

Shu said gold was seeing some support from buying by Chinese jewellery makers ahead of an early Spring festival next year.

Spot gold was up 0.2 per cent at $1,172.30 an ounce by 04:53 GMT.

It touched $1,157 an ounce on Monday, its lowest since February.

5 US gold futures, which also marked a 10-month low in the prior session, shed 0.2 per cent to $1,173.90 per ounce.

“The expected increase in key interest rates is largely account in current prices.

However, we do not exclude a drop of the gold price to $1,150 per ounce,” Heraeus Metals wrote in a note.

Bullion is highly sensitive to rising interest rates, which make the nonyielding asset less attractive while boosting the dollar, in which it is priced.

US services sector activity hit a one-year high in November, with a surge in production boosting hiring, further evidence of strength in the economy that clears the way for the Federal Reserve to raise interest rates next week.

Interest rates futures implied traders saw a 93 per cent chance the Fed would raise rates by a quarter point to 0.50-0.75 per cent next week, CME Group’s FedWatch showed. taken into