PRECIOUS-Gold slips on strong dollar, holds above $1,200/oz

* Dollar index up 0.8 pct vs basket of currencies

* Greece political anxiety lifts safe-haven bids

* Investors await minutes of December Fed policy meet (Updates prices, adds comment)

By Clara Denina

LONDON, Jan 7 (Reuters) – Gold eased on Wednesday after a three-day winning streak as the dollar and equities strengthened, but prices held above $ 1,200 an ounce and near their highest in three weeks ahead of minutes from the U.S. Federal Reserve’s December policy meeting.

Spot gold fell 0.3 percent to $ 1,214.95 an ounce by 1543 GMT, after jumping to its highest since Dec. 15 at $ 1,222.40 in the previous session as equities fell on concerns over Greece’s future in the euro zone.

U.S. gold futures for delivery in February fell 0.4 percent to $ 1,214.60 an ounce.

Gold’s near-term resistance for the closing price is expected at $ 1,220, while a close above that level would shift the focus to further gains, with a target of $ 1,250, technical analysts at ScotiaMocatta said.

“Gold has done well recently to rally despite a stronger dollar, but that was because both were moved by safe-haven considerations, given worries about the euro zone economy,” Macquarie analyst Matthew Turner said.

“And if the dollar gets another leg higher because the minutes are hawkish and the nonfarm payrolls are strong, the negative correlation between gold and the dollar will reassert itself.”

The dollar rose 0.8 percent against a basket of major currencies, trading close to a nine-year peak and making dollar-denominated gold more expensive for holders of other currencies.

Investors waited for the U.S. Federal Reserve’s December meeting minutes, which should give markets some clues as to the timing of interest rate rises, and U.S. payrolls data on Friday.

Gold has benefited from years of increased central bank liquidity and a low interest rates environment, while higher U.S. interest rates would encourage investors to put money into riskier assets such as stocks and bonds.

The metal was also undermined by an oil price drop, which reduces gold’s appeal as a hedge against oil-led inflation, and recovering stocks after data showing price deflation in the euro zone was seen as likely to trigger a bond-buying scheme by the European Central Bank.

Meanwhile, increasing speculation that Greece might exit the euro zone if a left-wing party that wants to cancel austerity measures wins the Jan. 25 elections could lift gold’s demand from investors looking for protection, traders said.

Silver reversed earlier losses to trade up 0.5 percent at $ 16.59 an ounce, while platinum was up 0.2 percent at $ 1,216.74 an ounce and palladium was down 1.2 percent to $ 791.47 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Jason Neely and Mark Potter)

Dollar Index

dollarindex.org@privydomain.com

You may also like...

Discussion on PRECIOUS-Gold slips on strong dollar, holds above $1,200/oz