Gold rose on Tuesday as Asian shares reversed gains and the dollar slipped, with the metal also supported by big inflows into bullion funds.Asian shares turned negative after rising to a seven-week high as the oil price rally that boosted global equity markets reversed. The dollar index fell from a three-week top.Spot gold had risen 0.7 percent to $1,216.30 an ounce by 0703 GMT. Bullion had fallen as low as $1,201.63 on Monday, when it lost 1.6 percent on the day as equities rallied.Bullion could be vulnerable to more corrections if stock markets strengthen, analysts said."Prices may stay under pressure at least in the near term," said HSBC analyst James Steel. "Greater investor risk appetite erodes demand for gold, while increased scrap adds to supply as major consumers are shying away from physical purchases."
Gold climbs as stock rally fizzles
Spot gold had risen 0.7 percent to $1,216.30 an ounce by 0703 GMT. Bullion had fallen as low as $1,201.63 on Monday, when it lost 1.6 percent on the day as equities rallied.
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Top consumers China and India have turned sellers of gold as prices rally. Discounts in India have hit a record high, while prices in China have also turned cheaper relative to the global benchmark, in a sign of waning demand.Gold has gained this year largely on the back of turmoil in stock markets and concerns over the global economy. But the metal has given back some of those gains as markets have stabilised.The volatility index, which measures implied volatility of stock options and is often seen as an investor fear gauge, fell below 20 percent this week, hitting the lowest closing level since early January.HSBC's Steel said the recent decline in gold prices doesn't mean the rally is over, adding that demand for bullion exchange traded funds and possible weakening of the dollar could support the metal.Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, rose 2.64 percent to 752.29 tonnes on Monday, the highest since March 2015.The 19.33-tonne inflow matches Friday's increase, which was the fund's biggest single-day inflow since August 2011.The fund's inflows since the beginning of the year have already surpassed outflows for the whole of 2015.Among other precious metals, silver ticked up after hitting a two-week low of $14.90 an ounce on Monday. Platinum held near a two-week low hit in the previous session, while palladium firmed.Credit: Reuters
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