NEW YORK/LONDON Gold rose by about 1 percent on Tuesday, spurred by a fall in global equities and inflows into bullion funds that helped the precious metal recover ground lost in previous sessions.
Traders said investor demand is strong on the price dips, even as producers have resumed hedging output to take advantage of the 15-percent rally this year.
"The metal continues to be supported by ETF inflows, but I would not be surprised to see a setback before another leg-up," Commerzbank analyst Eugen Weinberg said.
Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund (ETF), rose more than 19 tonnes to 752.29 tonnes on Monday, the highest since March 2015.
The fund's inflows since the beginning of the year have already surpassed outflows for the whole of 2015.
Spot gold was up 1.15 percent at $1,223.40 an ounce by 3:10 p.m. EST (2010 GMT). Prices had fallen 1.6 percent on Monday, when the dollar and equities rallied.
U.S. gold futures for April delivery settled up 1 percent at $1,222.60.
"If there is another big sell-off in equity markets, then levels around $1,260 are very achievable because you'd see defensive investors coming forward," said ETF Securities analyst Martin Arnold.
Bullion was boosted by European and U.S. shares turning negative, dropping from the previous session's two-week high on disappointing earnings updates and lower oil prices.
The dollar rose from a three-week high against a basket of main currencies.
Gold has gained about 15 percent since the beginning of the year, largely on the back of concerns over financial instability and economic growth that led to turmoil in international stock markets. It has also benefited from the repricing of expectations for U.S. interest rate rises.
The metal, however, could be vulnerable to more corrections in the short term, analysts said.
Technically, the gold price should stabilise in the $1,200 to $1,192 an ounce area, Commerzbank said.
Top consumers China and India have turned sellers of gold as prices have rallied. Discounts in India have hit a record high, while prices in China have also turned cheaper relative to the global benchmark in a sign of waning demand.Among other precious metals, silver rose by 0.33 percent to $15.26 an ounce after hitting a two-week low of $14.90 on Monday. Platinum was up 1.7 percent at $942.20, while palladium firmed 0.96 percent to $504.25.
(Additional reporting by A.Ananthalakshmi in Singapore; Editing by David Evans and Lisa Shumaker)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: Feb 24, 2016 02:45 am | Updated Date: Feb 24, 2016 02:45 am