LONDON: Gold slipped lower yesterdy as a strong dollar and signals that the US economy is benefiting from a decline in oil prices renewed expectations of a tightening in monetary policy by the US Federal Reserve around the middle of next year.
Spot gold dipped 0.8 percent to $1,200.40 an ounce by 1502 GMT, having gained nearly 4 percent on Monday in its biggest one-day jump since September 2013. U.S. gold futures fell 2 percent to $1,194.30 an ounce.
Spot prices had fallen on Monday to a near-three-week low after Switzerland voted against boosting its gold reserves, then rallied to $1,220.99, its highest in a month, as oil prices recovered.
“Technically, it is important that gold holds the $1,190 area, as a breach through that level could generate further losses to that $1,140 to $1,150 range that we have seen on Monday,” ActivTrades senior analyst Carlo Alberto de Casa said.
Bullion has fallen in tandem with oil in recent sessions on expectations that weaker crude prices could reduce inflationary pressures. The metal is usually seen as a hedge against oil-led inflation.
The dollar was up 0.7 percent against a basket of leading currencies, underpinned by comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley on Monday. Both said soft oil prices would dampen overall costs to consumers only temporarily and painted a mostly rosy outlook, suggesting the Fed was not letting energy distract it from lifting rates.
Reuters
