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Gold slips with oil; softer dollar fails to lift metal
Dec 28,2015 17:41CST
industry news
Source:SMM
Gold slipped on Monday, tracking lower oil prices, but failed to get safe-haven bids despite weakness in the dollar and Asian equities as liquidity remained thin in a holiday-shortened week.

December 28, 2015

Gold slipped on Monday, tracking lower oil prices, but failed to get safe-haven bids despite weakness in the dollar and Asian equities as liquidity remained thin in a holiday-shortened week.

Spot gold eased 0.2 percent to $1,073.10 an ounce by 0702 GMT. Silver dropped nearly 1 percent to $14.21.

Oil prices fell after the long Christmas weekend, with international crude and product markets still well supplied in excess of demand. Gold is positively correlated to oil as the metal is seen as a hedge against petroleum-led inflation.

The dollar index also fell, edging towards a two-month low hit earlier in the month. Asian stocks dipped amid a lack of immediate directional cues in light year-end trade.

Some markets, including Australia and many in Europe, will remain closed on Monday after Friday's Christmas holiday. Many markets will also be shut this coming Friday for New Year's Day.

"As it is a holiday shortened week, I don't think we would see much action. Having said that, we could see some sharp moves because of the paltry liquidity in markets," said a precious metals trader in Hong Kong.

"Early next year, gold should move lower as the dollar will remain strong in the first half of next year," he said. Any price moves will also be impacted by the pace of U.S. interest rate hikes, the trader said.

Higher rates would dent demand for non-interest-paying gold, while boosting the dollar.

Gold is set to close the year down about 9 percent, its third straight annual loss, largely in anticipation of the first U.S. rate hike in nearly a decade, which occurred this month.

Many traders and analysts expect gold to fall to $1,000 an ounce or even lower next year.

Assets in SPDR Gold Trust, the world's top gold exchange traded fund, are near a seven-year low, reflecting bearish investor sentiment.


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