Gold up on safe haven buying, markets brace for Opec meeting

[BENGALURU] Gold rose on Wednesday as 'risk on' sentiment took a backseat, with investors booking profits in the US dollar and bracing for the outcome of an Opec meeting later in the day aimed at curbing crude output.

Spot gold rose 0.4 per cent at US$1,192.74 an ounce by 0233 GMT.

US gold futures were up 0.3 per cent at US$1,191.40 per ounce.

"We have the Opec meeting today, non-farm payrolls Friday and Italian referendum this weekend. There's a bit of underlying bid in gold because of risks coming through the next few days," said Jeffrey Halley, senior market analyst at Oanda brokerage in Singapore.

"There's a bit of buying with some general profit taking on the long dollar positions," he added.

"We still have a quite formidable resistance at US$1,198-1,200 area and gold will struggle to sustain any sort of advance above this."

Oil markets were jittery on Wednesday ahead of an Opec meeting later in the day, with members of the producer cartel trying to thrash out an output cut to curb oversupply that has seen prices more than halve since 2014.

"The impact of an Opec deal on gold would be tricky to assess," said Edward Meir, an analyst with INTL FCStone.

"A failure by Opec to agree on a credible cut will send oil prices sharply lower and possibly drag gold down with it. However, we could see the dollar weaken as a result of oil selling off and this could boost gold," Mr Meir said.

The US dollar moved sideways against the yen and euro early on Wednesday, as traders focused on the oil producers meeting, which could potentially churn financial markets and weigh on the US currency.

The US economy grew faster than initially estimated in the third quarter, notching up its best performance in two years, buoyed by strong consumer spending and a surge in soybean exports.

The case for raising US interest rates has "clearly strengthened" since early November, before Americans elected Republican Donald Trump as president, Federal Reserve governor Jerome Powell said on Tuesday in the latest signal that a policy tightening is imminent.

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

Silver rose 0.6 per cent to US$16.64 an ounce.

Platinum was up 0.7 per cent at US$920.

Palladium edged up 0.4 per cent to US$763.40. It rose to an 1-1/2-year high of US$766.20 on Tuesday.

REUTERS