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Futures & Commodities

Gold climbs on firmer oil, but heads for third annual decline

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Gold edged up on Tuesday in response to firmer oil prices, but a rebound in the dollar limited upside momentum for the metal, which appeared poised for a third year of losses amid the prospect of rising U.S. interest rates.

Gold is likely to end 2015 down nearly 10 percent, mostly due to expectations that higher U.S. rates will hit demand for the non-interest-paying metal.

Spot gold rose 0.04 percent to $1,069 an ounce, after losing 0.6 percent in the previous session. Volumes were thin in the last trading week of the year.

U.S. gold futures for February delivery settled at $1,068.0 an ounce, little changed from the previous day's close of $1,068.3.

"Conditions (should) remain fairly quiet into the year end, with gold tracking a $1,060-1,085 range, in lieu of limited data and a number of traders still on holidays," MKS PAMP senior dealer Alex Thorndike said.

The dollar, weaker initially, rebounded 0.3 percent against a basket of leading currencies, after U.S. data showed higher-than-expected consumer confidence in December.

Separately, data also showed U.S. single-family home prices rose in October at a slightly faster pace than in September and above market expectations.

The U.S. currency will continue to be the main driver for gold, analysts said.

Aided by an improving U.S. economy, the Federal Reserve raised rates for the first time in nearly a decade this month and hinted at further gradual increases in 2016.

Global benchmark Brent crude steadied above 11-year lows but gains could be limited by persisting near-record output.

Assets of SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.18 percent to 643.56 tonnes on Monday, close to a seven-year low.

Speculators' short positions in COMEX gold contracts are near an all-time high, though data on Monday showed they had reduced the record bearish stance in the week to Dec. 22.

The technical picture also looked weak.

A breach of $1,067 an ounce could send the metal all the way to a multi-year low of $1,048, ScotiaMocatta said in a note.

Silver rose 0.7 percent to $14.03 an ounce, but was heading for an 11 percent yearly fall, while palladium gained 0.85 percent to $556.75 an ounce and platinum rose 1.14 percent to $889.55 an ounce.