SINGAPORE, Dec 28 (Reuters) – Gold slipped on Monday,
tracking lower oil prices, but failed to get safe-haven bids
despite weakness in the dollar and Asian equities as liquidity
remained thin in a holiday-shortened week.
Spot gold eased 0.1 percent to $1,074 an ounce by
0259 GMT. Silver dropped 0.5 percent to $14.27.
Oil prices fell after the long Christmas weekend, with
international crude and product markets still well supplied in
excess of demand. Gold is positively correlated to oil as the
metal is seen as a hedge against petroleum-led inflation.
The dollar index also fell, edging towards a
two-month low hit earlier in the month. MSCI’s broadest index of
Asia-Pacific shares outside Japan fell 0.2
percent, though Japan’s Nikkei was up 0.2 percent.
Some markets, including Australia and many in Europe, will
remain closed on Monday after Friday’s Christmas holiday. Many
markets will also be shut this coming Friday for New Year’s Day.
"As it is a holiday shortened week, I don’t think we would
see much action. Having said that, we could see some sharp moves
because of the paltry liquidity in markets," said a precious
metals trader in Hong Kong.
"Early next year, gold should move lower as the dollar will
remain strong in the first half of next year," he said. Any
price moves will also be impacted by the pace of U.S. interest
rate hikes, the trader said.
Higher rates would dent demand for non-interest-paying gold,
while boosting the dollar.
Gold is set to close the year down about 9 percent, its
third straight annual loss, largely in anticipation of the first
U.S. rate hike in nearly a decade, which occurred this month.
Many traders and analysts expect gold to fall to $1,000 an
ounce or even lower next year.
Assets in SPDR Gold Trust, the world’s top gold
exchange traded fund, are near a seven-year low, reflecting
bearish investor sentiment.
PRICES AT 0259 GMT
Metal Last Change Pct chg
Spot gold 1074 -1.5 -0.14
Spot silver 14.27 -0.07 -0.49
Spot platinum 885.15 3.65 0.41
Spot palladium 561 2.55 0.46
Comex gold 1073.2 -2.7 -0.25
Comex silver 14.27 -0.109 -0.76
COMEX gold and silver contracts show the
most active months