LONDON Gold fell for a third straight session on Tuesday as a rebound in European and U.S. stock markets undermined the metal's appeal as a haven from risk, and as the dollar strengthened against a currency basket.
The metal retreated from a high of $1,099.15 as European stocks rebounded from an early three-month low, Wall Street opened higher and the dollar index rose 0.3 percent. The rise in stocks suggested risk appetite is recovering after last week's rout. [.EU] [FRX/]
Spot gold was down 0.8 percent at $1,085.55 an ounce at 1452 GMT, while U.S. gold futures for February delivery were down $11.00 an ounce at $1,085.20.
"Gold was down yesterday after stocks came back, and down again today," INTL FCStone analyst Edward Meir said.
"(We're) looking for gold to perhaps get down to the $1,055-1,060 level as we expect a bounce in the equity markets to continue on account of earnings that likely will be no worse then estimates, stabilising macro readings from a number of countries, including China... and a possible jump in oil."
The metal has retreated after hitting a two-month high on Friday in a rally driven by a slump in oil prices and world shares on fears over the health of the Chinese economy.
Its early January rise ran out of steam late last week after prices hit resistance at their 100-day moving average. Gains have been capped by concerns over higher U.S. interest rates.
The metal fell more than 10 percent last year, largely on the back of expectations that the Federal Reserve is set to normalise U.S. rates. Ultra-low rates, which cut the opportunity cost of holding gold while weighing on the dollar, were a key factor driving gold to record highs in 2011.
The Fed raised rates in December and attention has shifted to how many hikes will follow in 2016.
"The Chinese stock market crash and the unease it's created ... lifted gold prices higher," Natixis analyst Bernard Dahdah said. "But generally, (we expect) gold to be below $1,000 this year. The market will be focused on what the Fed decides."
Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 2.1 tonnes on Monday, data from the fund showed.
Among other precious metals, palladium was the biggest faller, sliding 5 percent to a 5-1/2 year low of $449.55 an ounce in early trade. It was later at $473.50 an ounce, down 1.3 percent.
Silver was down 0.4 percent at $13.80 an ounce, while platinum was down 0.5 percent at $840.85 an ounce.
(Additional reporting by Naveen Thukral in Singapore; Editing by Mark Potter and Tom Heneghan)
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First Published On : Jan 13, 2016 00:30 IST