Gold rises in thin trade; Eyes Second Straight Weekly Drop
Gold gained 1 percent in thin post-Christmas trading on Friday as the dollar slipped against a basket of major currencies, but the metal was headed for a second straight weekly drop, underscoring the bearishness in the market. Spot gold gained 1 percent to $1,186.05 an ounce by 0711 GMT, moving away from a three-week low of $1,170.17 hit earlier in the week.
Liquidity was thin as key markets in the region such as Australia, Hong Kong and Singapore were closed on Friday. The U.K. market will remain closed, although New York will be open. So it can be the major reason for this. The weaker dollar probably attracted some bids but volumes are really low and this rally might not last once everyone is back from the holidays,” said a precious metals trader in Singapore.
The dollar index was 0.1 percent lower after climbing to a near nine-year peak earlier this week. Premiums in Singapore have dropped to between 80 cents and $1 an ounce over the global benchmark, from about $1.50 two weeks ago.
Trading volumes between Christmas and the New Year can be notoriously thin. In a low-volume climate, bullion prices can move sharply in either direction on even light investor purchases or sales. Despite Friday’s gain, the metal has lost about 1 percent for the week. Bullion lost ground after data showed the U.S. economy grew in the third quarter at its quickest pace in 11 years.
Strong data decreases gold’s appeal as a safe-haven asset and increases expectations of an interest rate hike in the United States. A higher dollar makes gold more expensive for holders of other currencies. An increase in rates is also seen to dull demand for non-interest-bearing bullion. Among other precious metals, silver was on track for a second straight weekly decline, while palladium and platinum were headed for weekly gains.
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