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PRECIOUS-Gold drops for 4th day as equities recovery cuts safe haven demand

Published 13/01/2016, 06:41 pm
© Reuters. PRECIOUS-Gold drops for 4th day as equities recovery cuts safe haven demand
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* Gold eases as market eyes another U.S. interest rate hike

* Rising stock markets, firmer dollar add pressure on prices (Updates prices)

By Naveen Thukral

SINGAPORE, Jan 13 (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 made their first real rally of the year after Chinese trade data handily beat expectations, offering a rare shaft of light for the global economy. MKTS/GLOB

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 XAU= slid 0.8 percent to $1,081.80 an ounce by 0725 GMT and U.S. gold futures GCcv1 fell 0.3 percent to $1,081.8.

"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 and risk-sensitive currencies recovered ground against the yen and the euro after China's central bank held the yuan steady and better than expected Chinese trade data helped reduce some of bearishness toward the world's second largest economy. USD/

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (N:GLD), rose 2.1 tonnes on Monday, data from the fund showed. GOL/ETF

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. other precious metals, palladium XPD= fell for a third consecutive session to $468 an ounce after sliding to a 5-1/2-year low of $449.55 an ounce on Tuesday.

Silver XAG= fell 0.1 percent to $13.775 an ounce, while platinum XPT= was little changed at $837 an ounce.

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