Gold prices hold losses from biggest dip in 5 months after US Fed rate hike

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Singapore | Published: December 18, 2015 7:53:48 AM

Gold prices steadied on Friday but largely retained losses made a day earlier when the metal suffered its biggest slide in five months after the Federal Reserve hiked U.S. rates for the first time in nearly a decade.

goldGold has tumbled 11 percent this year, largely on uncertainty around the timing of the rate rise and on fears that higher rates would hit demand for the non-interest-paying metal. (Reuters)

Gold prices steadied on Friday but largely retained losses made a day earlier when the metal suffered its biggest slide in five months after the Federal Reserve hiked U.S. rates for the first time in nearly a decade.

Spot gold ticked up 0.3 percent to $1,053.96 an ounce by 0051 GMT as the dollar eased on profit taking following sharp gains.

The metal slid 2 percent on Thursday, its biggest one day slide in five months. It is down 2 percent for the week in its worst weekly performance in six weeks.

Gold has come under intense sell off since the Federal Reserve raised the range of its benchmark interest rate by a quarter of a percentage point on Wednesday, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.

The move sent the dollar to a two-week high on Thursday against a basket of major currencies. * On the other hand, gold saw little interest, with investors sending the yellow metal to $1,047.25 in the previous session, close to a near-six-year low.

Gold has tumbled 11 percent this year, largely on uncertainty around the timing of the rate rise and on fears that higher rates would hit demand for the non-interest-paying metal.

Many are predicting further drops. Gold is likely to test the key $1,000 level soon, technical analysts said.

Assets in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, fell 0.70 percent to 630.17 tonnes on Thursday, the lowest since September 2008.

Hedge funds’ net short positions in COMEX gold futures reached record levels this month. * Other precious metals were all struggling due to the robust dollar.

Silver held on to an overnight slump of 3 percent, its biggest one day drop in nearly three months, while platinum eased after posting its biggest slide in a year. Both the metals were headed for weekly declines.

With a 2 percent gain, palladium was the best performer among the precious metals this week, though it did decline overnight by 2.5 percent.

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