Gold was stuck below $1,200 an ounce on Monday, struggling to get past last week’s losses, hurt by a stronger dollar and equities which dulled the metal’s safe-haven appeal, and expectations of higher US interest rates.
Spot gold was little changed at $1,194.95 an ounce by 0023 GMT, after losing about 2 per cent last week on worries over a US interest rate hike next year.
Charts signal that
>#gold futures traded on the MCX could fall to Rs. 26,000
— Gurumurthy K (@gurukmurthy)
>December 22, 2014The Federal Reserve, after wrapping up a two-day meeting last Wednesday, signalled it was on track to increase rates next year but said it was taking a patient stance, keeping gold’s losses in check.
Higher interest rates would hurt the non-interest-bearing bullion, which was boosted by central bank liquidity and a low interest rate environment in the years following the 2008 financial crisis.
Also weighing on gold was the strength in equities.
Asian shares and the dollar began a holiday-shortened week on a strong footing on Monday, with the euro testing two-year lows against the greenback.
Trading activity was likely to be thin this week, with many investors away for Christmas and the run-up to the New Year’s holiday.
Hedge funds and money managers cut their net long positions in gold and silver futures and options in the week to December 16, a period of choppy trade amid volatility in dollar and oil prices, US government data showed Friday.
Holdings in SPDR Gold Trust
More recent data about clues on investor positioning shows that holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.41 per cent to 724.55 tonnes on Friday.
Russia’s gold reserves climbed to 38.2 million troy ounce as of December 1 from 37.6 million troy ounce a month earlier, the central bank said on Friday.