Gold drops for 4th day as stock market recovery cuts safe haven demand
(Reuters) - Gold lost more ground on Wednesday as a rebound in stock markets reduced some of the
Precious metal’s safe haven appeal with additional pressure from a strengthening greenback.
Asian shares crept off four-year lows as China's efforts to stabilize its currency brought a moment of calm to equity markets, even as oil marked a sorry new milestone under $30 a barrel.
A late rebound in energy and biotech shares helped push the S&P 500 to a second straight day of gains on Tuesday and the pan-European FTSEurofirst 300 index <.FTEU3> climbed 1.1 percent after four sessions of declines.
Spot gold slid 0.2 percent to $1,084.20 an ounce by 0347 GMT and U.S. gold futures gave up 0.2 percent to $1,083.20.
"The market is expecting, perhaps in March the Fed will have its second interest rate hike. It will lead to a very strong U.S. dollar, so gold prices are likely to face pressure," said Shandong Gold Group chief analyst Shu Jiang.
The metal's rally in early January to a nine-week top has run out of steam as expectations of further U.S. interest rate increase lowers demand for the non-interest-paying asset, while boosting the dollar.
The Fed raised rates in December and attention has shifted to how many hikes will follow in 2016.
The dollar steadied as the rush to safe haven currencies such as the yen and the euro halted temporarily after Chinese authorities intervened heavily to stem the yuan's fall.
Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 2.1 tonnes on Monday, data from the fund showed.
China has launched interbank gold trading at the beginning of this year, part of a broader drive to open up the country's bullion market and increase financial investments in the world's largest consumer of the precious metal.
Among other precious metals, palladium was little changed at $471.30 an ounce after sliding to a 5-1/2 year low of $449.55 an ounce on Tuesday.
Silver added 0.2 percent to $13.82 an ounce, while platinum gained 0.6 percent to $837.53 an ounce.