SINGAPORE-- Gold rose on Tuesday, moving away from a three-week low hit in the previous session, as the dollar and equities eased after recent rallies.
Spot gold had climbed 0.7 percent to $1,182.40 an ounce by 0752 GMT. It tumbled nearly 2 percent in the previous session, dropping to $1,170.17 an ounce - its lowest since Dec.1.
Liquidity was thin due to the upcoming Christmas holiday, while Japanese markets were closed on Tuesday for a public holiday.
"Positioning still seems to be light in gold so we expect the market to remain contained during the holiday period, but big swings in other markets such as the dollar and crude will exacerbate moves due to the light liquidity," said Alex Thorndike, senior trader at MKS Group.
Traders were closely watching moves in the equity, forex and oil markets for cues.
Rising equities and a stronger dollar dull demand for gold as a safe-haven asset. Lower oil prices decrease its appeal as a hedge against oil-led inflation.
Wall Street closed at historic highs on Monday, boosting global equities. The dollar index, a measure of the greenback's strength against a basket of major currencies, was holding close to a nine-year peak.
A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
Equities and the dollar gave up some of those gains on Tuesday on profit-taking.
Bullion found some support in the physical markets, where top consumer China saw bargain hunters emerge after the price drop on Monday.
Prices on the Shanghai Gold Exchange rose to a premium of up to $5 an ounce over the global benchmark, compared with $2-$3 in the previous session.
"While emerging market buying on dips is likely to moderate further potential price declines, ongoing oil market weakness is a significant weight on bullion and may very well cap rallies," HSBC analysts said in a report.
In central bank activity, data from the International Monetary Fund data released on Tuesday showed that Russia raised its gold reserves for an eighth month in a row in November,while Ukraine reduced bullion holdings for a second straight month.
Significant buying and selling by central banks can influence gold prices.
Data on U.S. GDP, durable goods orders and new homes sales, along with GDP data from Britain and France will be eyed for cues later in the session.
Reuters
