Gold prices rose for a second day on Tuesday supported by an easing US dollar and physical buying in Asia.

Spot gold was up 0.3 per cent at $1,217.54 an ounce by 0322 GMT. In the previous session, the metal rose 0.4 per cent, reversing three sessions of losses.

US gold futures were up 0.6 per cent at $1,217.20 per ounce, after reaching as high as $1,220.90 earlier.

“Gold prices have factored in the December (rate hike) move. Now it is a matter of bargain hunting,” said Spencer Campbell, general manager with Kaloti Precious Metals in Singapore.

“We are seeing a lot of activity in Southeast Asia. The drop in prices and inverse pricing against the local currency is driving the buying.”

Gold has fallen more than $120 an ounce from its post-US election peak on November 9 as US Treasury yields posted their biggest two-week rise in more than five years and the dollar shot higher.

However, on Tuesday the US dollar weakened which lent support to the yellow metal.

The dollar index, which measures the greenback against a basket of major currencies, was down 0.2 per cent at 100.860, falling further after snapping a 10-day rising streak on Monday.

The greenback retreated for the first time in a number of sessions which supported buying for gold, said Jason Cerisola, MKS PAMP Group trader.

“Gold kept its head above water, with technical-based buying supporting the market. However, with the market increasing bets on a December rate hike in the US, this buying is unlikely to persist in the short-term,” ANZ analysts said in a note.”

Gold is highly-sensitive to rising interest rates which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.71 per cent to 908.77 tonnes on Monday. Holdings have fallen 3.6 per cent so far this month.

Goldman Sachs had on Monday lowered its three- and six-month gold price outlooks to $1,200 per troy ounce and said downside risks remain from potential physical ETF liquidation.

Spot gold may test a resistance at $1,222 per ounce, a break above which could lead to a gain to $1,235, according to Reuters technicals analyst Wang Tao.

Among other precious metals, silver was rose 1.1 per cent at $16.77 an ounce. Platinum was 1.2 per cent higher at $945.35 and palladium was up 0.3 per cent at $730.40.

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