Gold slipped on Tuesday but retained most of the gains from its biggest daily jump in a year the day before as a rebound in oil prices and a weaker dollar burnished its appeal as a hedge.

Spot gold had dipped 0.3 per cent to $1,206.30 an ounce by 0042 GMT, after gaining nearly 4 per cent on Monday — its biggest one-day jump since September 2013.

The metal hit $1,220.99 in the previous session — its highest since October 29, after dropping to $1,142.91 earlier in the day after Switzerland voted against a proposal to boost its gold reserves.

Spot silver gained nearly 7 per cent on Monday, recovering from sharp declines to a five-year low.

US gold futures fell 1 per cent on Tuesday, after strong gains in the previous session.

The metals got a boost as crude oil markets jumped as much as 5 per cent on Monday, rebounding from five-year lows with their biggest daily gain since 2012, on fears that the high US shale output blamed for the global oil glut may be shrinking.

Inflationary pressures

Bullion had fallen along with oil in recent sessions on expectations that weaker oil prices could mean less inflationary pressures. Gold is seen as a hedge against rising prices.

The boost in oil prices on Monday also weakened the dollar, which fell on stronger commodity currencies. A weaker greenback boosts dollar-denominated gold as it makes bullion cheaper for holders of other currencies.

Hedge funds and money managers boosted their bullish stance on gold and silver futures and options in the week to November 25, the U.S. Commodity Futures Trading Commission had said on Monday.

Easing of gold import norms

An unexpected move by India’s central bank to ease curbs on overseas purchases indicates the government is more relaxed about the trade deficit, though trade sources said it does not mean there will be a jump in imports.

The Perth Mint’s silver sales in November climbed to their highest since January as lower prices attracted retail investors, while gold sales fell to a three-month low.

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