Gold retains losses as dollar rallies on Fed rate hike view

SINGAPORE: Gold struggled to recover from overnight losses on Tuesday on expectations of a Federal Reserve rate hike next week and a robust dollar.

FUNDAMENTALS

* Spot gold XAU= was little changed at $1,071.52 an ounce by 0009 GMT. It fell as much as 1.6 percent on Monday to hit a session low of $1,069.66.

* Friday's strong US nonfarm payrolls data supported widely held market views that the Fed would hike interest rates for the first time in nearly a decade later this month.

* Gold gained 2.3 percent on Friday on short-covering immediately after the data, but with the focus back on the rate rise next week, investors sold off the metal on Monday.

* The dollar extended gains against a basket of major currencies on Monday, helped by the jobs data and the looming rate hike, further weighing on bullion.

* Higher rates tend to drag on non-interest-paying gold by increasing the opportunity cost of holding it, while boosting the dollar.

* Bullion has lost about 9.5 percent for the year, its third straight annual decline, on expectations of the rate hike.

* Investor sentiment has been downbeat. Assets in SPDR Gold Trust (GLD), the world's largest gold-backed exchange-traded fund, tumbled 0.65 percent to 634.63 tonnes on Monday, the lowest since September 2008.

* Elsewhere, China likely added nearly 21 tonnes of gold to its reserves in November, according to Reuters calculations from central bank data on Monday.

* The central bank's biggest purchase in five months failed to provide much support for the gold price.

MARKET NEWS

* Oil prices skidded to their lowest level in nearly seven years on Monday as a global glut showed no signs of abating. Stock markets fell.

DATA AHEAD (GMT)

0200 China Trade data Nov

1000 Euro zone Revised GDP Q3

1100 US NFIB business optimism Nov