Gold price recoups previous week's losses as dollar steadies

New York (Oct 9)  Gold rose on Monday, erasing all of the previous week's losses, as a steadier dollar and the resilience of a key chart level removed some downward pressure, while the return of Chinese buyers to the market also lent support.

Prices fell for a fourth week to hit a two-month low on Friday, after an upbeat reading of U.S. wage growth and
unemployment supported expectations for a U.S. interest rate hike in December, pushing the dollar and Treasury yields higher.

Gold's resilience above its 200-day moving average at $1,253 an ounce provided some reassurance to buyers, however, helping
it rebound. Meanwhile, the dollar came off the boil, steadying below a 10-week high, while geopolitical concerns centred on North Korea and Spain supported prices.

Spot gold was up 0.5 percent at $1,281.52 an ounce at 1025 GMT, while U.S. gold futures for December delivery
were up $8.90 an ounce at $1,283.80.

"For the time being, gold may have bottomed out," ABN Amro analyst Georgette Boele said. "On Friday people were very
reluctant to buy dollars, even though there were enough signals to do so ... and the dollar has come under some pressure again,
which is being reflected currently in gold."

"The 200-day moving average has proved to be intact still ... so there were some technical elements playing out," she
added. "I think we can go back towards $1,300."
Expectations for a Fed rate hike, she added, are still providing some headwinds to gold, which, as a non-yielding
asset, tends to suffer as interest rates rise.
    China's central bank held off from adding to gold reserves
for an 11th straight month in September, data showed on Monday.
China had been a significant official-sector gold buyer in
previous years.            
    On the physical markets, Chinese buyers returned after the
Golden Week holiday.
    "The onshore premium pushed toward $10 on the back of
USD/China weakness and continued underlying physical demand kept
price action buoyant throughout the afternoon," MKS said in a
note.
    "The concern for bullion will be the strengthening U.S.
dollar, with the Fed funds futures now pricing in an 80 percent
chance of a December interest rate increase," it said.
    Speculators cut their net long positions in COMEX gold and
silver contracts for the third straight week, in the week to
Oct. 3.       
    In other metals, silver was up 0.6 percent at $16.88
an ounce, while platinum was up 0.4 percent at $916.20 an
ounce and palladium was 0.8 percent higher at $927.