Gold rebounds after sinking to near 6-month low

By Apeksha Nair

(Reuters) - Gold prices edged higher on Tuesday as investors snapped up bars and coins in a wave of physical buying after the metal dropped to its lowest level in nearly six months in the previous session.

Spot gold was up 0.4 percent at $1,224.46 an ounce at 0554 GMT. The metal had slipped to its lowest since June 3 at $1,211.08 an ounce on Monday.

U.S. gold futures climbed 0.2 percent to $1,224.30.

Demand from China buoyed prices during Asian trade, said MKS PAMP Group trader Sam Laughlin.

"Support for the metal sits broadly around $1,210, while below this, the late May low around $1,200 should see strong (buying) interest."

 

The metal has fallen nearly 9 percent from a Nov. 9 high of $1,337.40 per ounce after Donald Trump's election as U.S. president, hurt by a stronger U.S. dollar and surging Treasury yields as investors bet fiscal and trade policies under his administration will stoke inflation.

The dollar index slipped 0.17 percent at 99.938, but remained well within reach of its December 2015 peak of 100.51. [USD/]

"It seems like Trump's increased spending will increase inflation expectations, on the back of which the U.S. dollar has risen strongly" said NAB analyst Vyanne Lai.

"(Market) sentiment is being compounded by the very high probability of the U.S. Fed raising interest rates in December."

Dallas Fed President Robert Kaplan on Monday suggested the U.S. central bank is on track to raise rates soon.

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

Spot gold may test resistance at $1,235 per ounce, as it has found a support zone of $1,204-$1,210, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver was up 0.3 percent at $16.93 per ounce. The metal touched its lowest since June 8 at $16.61 an ounce the session before.

Platinum rose 1.2 percent to $941.80 an ounce, shrugging off over 8-month lows of $917.50 touched in the last session.

Palladium was down 1 percent at $691.00 an ounce after earlier hitting its highest since Oct. 4 at $702.50.

(Reporting by Apeksha Nair in Bengaluru; Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Kenneth Maxwell)