Gold rises in Europe

Gold rose on Wednesday as a retreat in the dollar from the previous session's 14-year peak prompted some buyers to hunt bargains after the metal's sharp slide from its November high. The metal had been hit hard by a surge in the dollar after the November US elections, and a more hawkish tone from the Federal Reserve after it hiked US interest rates for only the second time in a decade last month.
Prices had fallen more than 11 percent since the elections, before finding a floor at around $1,125 an ounce. Spot gold was up 0.3 percent at $1,134.60 an ounce at 1450 GMT, while US gold futures for February delivery were up $2.70 an ounce at $1,136.30. Gold is taking some support from moves in the wider markets, Commerzbank analyst Carsten Fritsch said. "The US dollar is slightly weaker and US bond yields are slightly lower as well," he said.
"Liquidity will dry up in the run-up to Christmas and the year-end," he added. "So everything can happen, huge volatility or lacklustre trade." The dollar fell on Wednesday from the 14-year high it hit the day before, pausing in a post-US elections run higher that has represented its entire gain for the year, while concerns over the banking sector pulled European shares lower.
The Fed, which raised interest rates last week, signalled three more increases next year. Gold is highly sensitive to rising US rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Hefty outflows from gold-backed exchange-traded funds of late have been pressuring gold, HSBC said in a note.
"Declines of 300,000 ounces reported Monday night are the latest in more than a month of consecutive gold ETF outflows," it said. "The GLD, the world's largest gold ETF, has fallen 13 percent to 26.6 million ounces since the US November elections." Among other precious metals, silver was down 0.4 percent at $16.01 an ounce, off the previous day's low of $15.59 an ounce, its weakest since April 11. Platinum was 0.2 percent lower at $913.60 an ounce.
Palladium was down 0.9 percent at $658 an ounce, having earlier touched a six-week low of $654.25. It remains the best performing precious metal this quarter, with a drop of just 8 percent, compared with a 14 percent drop in gold prices and an 11 percent retreat in platinum.