Gold prices moved higher during Asian hours on Tuesday as investors snapped up bars and coins in a wave of physical buying after the precious metal slipped to its lowest level in nearly six months in the previous session.
Spot gold was up 0.4 percent at USD 1224.76 an ounce at 0256 GMT. The metal had slipped to its lowest since June 3 at USD 1,211.08 an ounce on Monday.
US gold futures were up 0.25 percent at USD 1,224.60.
The metal has fallen nearly 9 percent from a Nov. 9 high of USD 1,337.40 per ounce since US President-elect Donald Trump’s election win, as investors bet fiscal and trade policies under his administration would stoke inflation.
“Given such a sharp drop, the fall would be cushioned by physical demand pickups,” said NAB analyst Vyanne Lai.
“It seems like Trump’s increased spending will increase inflation expectations,” Lai said. “The (market) sentiments are being compounded by the very high probability of the US Fed raising interest rates in December.”
Markets are now anticipating a hike in US interest rates in December. Dallas Fed President Robert Kaplan on Monday suggested the Federal Reserve is on track to raise US interest rates soon.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
The dollar index was down 0.2 percent at 99.920, but remained within reach of its December 2015 peak of 100.51.
Spot gold may test a resistance at USD 1,235 per ounce, as it has found a support zone of USD 1,204-USD 1,210, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver was up 0.9 percent at USD 17.02 per ounce. The metal touched its lowest since June 8 at USD 16.61 an ounce in its previous session.
Palladium was down 0.2 percent at USD 696.80 an ounce. The metal hit a high of USD 702.50 earlier in the session, its highest since October 4.
Platinum was up 0.65 percent at USD 936.75 an ounce, bouncing off over 8-month lows of USD 917.50 touched in the previous session.
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