ALSO READGold rises on weakening dollar; heading for best year since 2010 Gold prices tumble Rs 250 to Rs 30,500 post US Fed policy move Gold recovers on renewed buying, silver surges ahead of Fed outcome Gold retreats from one-month high ahead of Fed meeting Gold sheds Rs 150 to Rs 30,250 per 10 gm on weak global cues, tepid demand
Gold is opening the new year on the front foot. Bullion advanced for an eighth straight day to head for the longest stretch of gains since mid-2011, building on an annual surge that pushed the precious metal to its best year in seven as the dollar weakened.
Bullion for immediate delivery advanced as much as 0.5 per cent to $1,309.32 an ounce, the highest level since September 26, and was at $1,309.06 at 6:37 am in London, according to Bloomberg generic pricing.
Last year, the commodity climbed 14 per cent as the Bloomberg Dollar Spot Index lost 8.5 per cent to post the steepest decline since at least 2005.
Gold's strong run in 2017 came even as US stock markets surged to records and the Federal Reserve increased interest rates three times amid signs of an improving economy. Fed policy makers are projecting another three hikes in 2018, while other central banks around the world have also shifted toward a tighter monetary stance, with the European Central Bank planning to halve its asset purchases starting this month.
"As global complacency over the trajectory of US rates continues to be astoundingly low, precious metals, in general, should continue to benefit," Jeffrey Halley, senior market analyst at Oanda Corp in Singapore, said in a note. "The old adage that the market can stay irrational longer then you can stay solvent appears to be alive and well in the gold market at the moment."
As prices rose again on Tuesday, bullion's 14-day relative strength index was at 71.3, up from 69.1 on Friday and above the level of 70 that can indicate that an asset may be set for a decline. "The relative strength index is now at very overbought levels," Halley warned.
Among releases that investors will scrutinise this week for clues on the direction of monetary policy are minutes of the Federal Open Market Committee's December meeting, due on January 3. Separately, there'll be non-farm payrolls and average hourly earnings issued on January 5.
In other precious metals:
- Silver added 0.5 per cent to $17.0188 an ounce
- Platinum rose 0.6 per cent to $933.89 an ounce
- Palladium climbed 1.1 per cent to $1,074.97 an ounce, the highest level since 2001