- Atul Lele, chief investment officer at Deltec International Group
Yellow metal's price steadied around the key $1,200 level, due to a rise in oil prices. Oil rebounded more than 1% on Wednesday, but Brent and WTI crude have plunged more than 30% since June and slid to five-year lows earlier in the week amid supply worries. Additionally, bullion received some support from inflows of 2.4 tonnes into SPDR Gold Trust, the world's leading gold-backed exchange-traded fund. Despite the first inflow in two weeks, the fund's holdings are remaining firmly near the lowest level in six years, underscoring bearish sentiment in the market. The downtrend in gold price persists, as optimism over the US economy and a strong Dollar continues to dampen bullion's appeal as inflation hedge. The Greenback rose to the highest level in seven years against the Japanese Yen on Wednesday and continued to hold strong versus a basket of major currencies.
Gold has declined in tandem with oil in recent trading sessions amid expectations that weaker crude prices could lower inflationary pressure. The metal is usually seen as a hedge against rising prices. The metal's 60-day volatility is close to 16, the highest since mid-March. Prices advanced 3.6% on December 1, the biggest daily rise since September 2013, after crude soared 4.3%, the most since August 2012. At the moment of writing, gold for immediate delivery traded at $1,201.22.
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