Gold rose on Thursday as the previous day's 1 percent drop lured price-sensitive buyers, and as the dollar retreated from a seven-year high against the Japanese yen. The metal fell on Wednesday after a poll showed weaker support among Swiss voters for a referendum proposal that would force the central bank to boost its gold reserves. Appetite for physical gold sparked a reversal in that move, dealers said, with demand from buyers in Asia lifting gold off its overnight low at $1,176.56 an ounce.
Spot gold was up 0.8 percent at $1,192.69 an ounce at 1500 GMT, while US gold futures for December delivery were down $2.00 an ounce at $1,191.90. Earlier this month it slid to a 4-1/2 year low at $1,131.85. "You can't deny the fact that rising interest rates and a strong dollar aren't good for gold, and it is certainly our forecast that the dollar will strengthen further next year," Capital Economics analyst Caroline Bain said.
"On the positive side, though, we are at the kind of levels where we'd expect quite a rebound in physical demand." The dollar index eased on Thursday, but the currency held near a seven-year high versus the yen as investors bet that the Federal Reserve will start raising interest rates next year while the Japanese central bank maintains stimulative policies.
A stronger dollar tends to weigh on gold, which is priced in the US unit. Selling by gold funds resumed after a brief pause this week. The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, said its holdings fell 0.3 percent to 720.91 tonnes on Wednesday. Gold exports to China from Switzerland, a major trading and refining centre, more than tripled to 42.5 tonnes last month, Swiss customs data showed.
Among other precious metals, platinum briefly slipped into a discount to gold for the first time since mid-October before recovering to trade at a premium of about $10 an ounce. Platinum was up 1.9 percent at $1,205 an ounce, while palladium was up 0.7 percent at $765.70 an ounce. Silver was up 0.3 percent at $16.14 an ounce.
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