Gold dips below one-month high on dollar, European shares
London (Jan 12) Gold retreated from a one-month high on Monday, as the dollar and shares rose, but doubts over the likely timing of an increase in U.S. interest rates this year were seen likely to bolster investment demand in the short term.
U.S. nonfarm payrolls data on Friday showed U.S. wages posted their biggest decline in at least eight years in December, even though payrolls increased by a brisk 252,000.
The data added to speculation the Federal Reserve would be cautious in raising interest rates, which could help non-interest-bearing gold.
Spot gold climbed to its highest since Dec. 11 at $1,231 an ounce, before edging 0.1 percent lower to $1,221.60 by 1019 GMT. The metal posted its biggest weekly gain since June last week at 2.9 percent, also snapping a three-week decline.
"The market is dominated by this ongoing debate about whether the Fed looks at the jobs and the GDP growth or wage inflation and how their focus will impact the timing of interest rates hikes," Societe Generale analyst Robin Bhar said.
"In the meantime there are critical events such as the ECB meeting on monetary easing next week and then the Greek political elections, which could give support to prices at least until the end of the month, due to the need for safe havens."
The dollar index rose 0.2 percent against six major currencies, but stood below a nine-year peak hit last week, while European shares rose and oil prices fell to their lowest level since April 2009.
Weaker oil prices tend to hurt gold as they reduce the need for gold as a hedge against oil-led inflation. But as equity markets have recently been hit by persistent weakness in oil prices, flight to safety demand bolstered the metal.
Short-term investor sentiment turned slightly more positive towards gold, with holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rising 0.42 percent to 707.82 tonnes on Friday.
Hedge funds and money managers raised their net long positions in gold and silver futures and options in the week to Jan. 6, U.S. Commodity Futures Trading Commission data showed on Friday.
Bullion was also getting some support from the physical markets, with buyers in top consumer China stocking up for the Lunar New Year holiday in February.
Premiums on the Shanghai Gold Exchange were between $4 and $5 an ounce, steady from last week.
Among other precious metals, silver was up 0.5 percent at $16.57 an ounce, while platinum and palladium rose 0.1 percent to $1,229.49 an ounce and $801.20 an ounce respectively.
Source: Reuters
