Gold edges up after 2-day decline, China concerns support | Reuters - Firstpost
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Gold edges up after 2-day decline, China concerns support | Reuters

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SINGAPORE Spot gold edged higher on Tuesday, snapping two sessions of decline, as concerns over China's economic growth and pressure on stock markets lifted the precious metal.

FUNDAMENTALS

* Spot gold XAU= firmed 0.2 percent to $1,095.6 an ounce by 0037 GMT, while U.S. gold futures GCcv1 eased 0.1 percent to $1,095.2.

* China's main stock indexes .SSEC .CSI300 each dropped more than 5 percent on Monday. Oil prices fell to new 12-year lows, as concerns over China hurt commodity prices broadly.

* Right from the beginning of 2016, markets have been rocked by plunges in Chinese stocks, the yuan's fall and subsequent heavy intervention by the Chinese authorities.

* The chaotic moves have led to worries China's economy may be in for tough time rather than stabilising as some had hoped.

* China is the world's biggest consumer of gold at around 1,000 tonnes a year.

* The yellow metal is often seen as an alternative investment during times of financial uncertainty, although safe-haven rallies tend to be short-lived.

* The gain in gold prices is likely to be capped by concerns that higher U.S. interest rates would lower demand for the non-interest-paying asset, while boosting the dollar. The Fed raised rates in December and attention has shifted to how many hikes will follow in 2016.

* Atlanta Federal Reserve Bank President Dennis Lockhart said there may not be enough fresh data on inflation to support another U.S. interest rate hike by March.

* Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 0.69 percent on Friday, data from the fund showed.

MARKET NEWS

* Asian shares hovered near four-year lows and oil prices languished at near 12-year lows on Tuesday as investors fretted over whether Beijing may be losing control of the economy.

(Reporting by Naveen Thukral; Editing by Ed Davies)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Jan 12, 2016 07:00 IST

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