Gold stuck near three-month low as US rate hike looms

Gold was mired near a three-month low on Tuesday on expectations the US Federal Reserve was well on track to raise interest rates before the end of the year.

A forecast-beating US October employment report on Friday pushed up bets that the Fed will increase interest rates in December for the first time in nearly a decade, weighing on the price of non-interest bearing gold.

"Gold will stay below $1,100 as the interest rate hike becomes more and more imminent," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

Spot gold was little changed at $1,092.60 an ounce by 0241 GMT. Bullion ended an eight-day losing run on Monday, but not enough to pull it far away from Friday's low of $1,084.90, its weakest since August 7.

 

Following bullion's recent steep drop, MKS Group trader James Gardiner said "a bounce, or at least a consolidation, is well overdue". He pegged the next support level for gold at around $1,074 and then at $1,050.

The dollar hovered just below a seven-month peak against a basket of major currencies, having consolidated its payrolls-inspired rally in a subdued session overnight.

US gold for December delivery gained 0.4% to $1,091.90 an ounce.

After a potential rate hike in December, the US central bank may take its time in raising rates further which should be broadly supportive for gold, said INTL FCStone analyst Edward Meir.

But Meir said the metal faces more weakness in the near term and "poor technicals and a buoyant dollar do not help gold's upside case much either".

While the market braces for a US rate hike, a consensus is forming at the European Central Bank to take the interest rate it charges banks to park money deeper into negative territory in December, in a move that could weaken the euro and push up inflation. 

Spot platinum slipped 0.3% to $907.55 an ounce after coming close to Monday's one-month low $904.75.