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Gold holds drop as equities rally, US dollar strength blunt demand
[SINGAPORE] Gold held a retreat as equities advanced and a gauge of the US dollar extended gains to a seven-month high, blunting demand for a haven.
The metal for immediate delivery slipped less than 0.1 per cent to US$1,263.52 an ounce at 9:10am in Singapore after declining 0.2 per cent a day earlier, according to Bloomberg generic pricing. A second day of losses would be bullion's first back-to-back drop in more than two weeks.
Gold's advance in 2016 has been eroded this half on prospects for higher borrowing costs from the Federal Reserve. The US central bank is gearing up for a second interest-rate increase after a hike last December that was the first in almost a decade.
Investors now see a 71 per cent chance of a hike before the end of the year, up from 59 per cent at the start of October, Fed funds futures show.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, was near the highest level since mid-March on Tuesday following three days of increases. The MSCI Asia Pacific Index of equities headed for a two-week high after US shares rallied.