Gold steady as Germany, Turkey incidents fail to prompt safe-haven buying

[BENGALURU] Gold prices were steady on Tuesday after deadly incidents in Germany and Turkey failed to spur safe-haven buying, with markets focused on the possibility of further US interest rate hikes next year.

The Russian ambassador to Turkey was shot in the back and killed as he gave a speech at an Ankara art gallery on Monday by an off-duty police officer.

Later, a truck ploughed into a crowded Christmas market in central Berlin, killing 12 people and injuring 48 others in what Germany's interior minister said looked like an attack.

Optimistic remarks on the US labour market by Federal Reserve Chair Janet Yellen strengthened the possibility of further rate hikes next year.

"In the absence of any major US macro numbers scheduled to be released on Tuesday, we do not expect to see gold doing much of anything over the short-term," INTL FCStone analyst Edward Meir said in a note.

Gold needs to see signs of economic instability to push up, but that is unlikely in the current environment of rising global equity markets, stronger US growth and a firmer US dollar, Mr Meir added.

Spot gold was flat at US$1,138.56 an ounce by 0330 GMT, while US gold futures fell 0.2 per cent to US$1,140.60 per ounce.

A bounce target at US$1,153 per ounce has been temporarily aborted for spot gold as it seems to have lost momentum after breaking resistance at US$1,137, according to Reuters technical analyst Wang Tao.

"The current economic scenario favours investments into assets offering higher yields," said Mihir Kapadia, CEO of London-based Sun Global Investments Ltd.

"As the Fed is projecting three interest rate hikes in 2017, gold prices will remain turbulent and susceptible to rising interest rates and bond yields." 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.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.06 per cent to 828.10 tonnes on Monday. Holdings are down over 12 per cent since November.

Meanwhile, spot silver was 0.3-per cent higher at US$16.01 an ounce. Platinum edged up 0.2 per cent to US$918.70, while palladium was down 0.3 per cent at US$675.20.

REUTERS