Gold rose on Tuesday, the first day of trade in many markets following public holidays, supported by a rebound in oil prices and by investors in Australia buoyed by new-found clout in currency markets against a weaker US dollar.
Spot gold was at $676.60/677.10 an ounce by 0647 GMT, against $671.50/672.50 late in New York. London and some European and Asian markets, including Australia, were closed on Monday because of the Easter holiday. Rebounding oil prices - raising the threat of inflation - put the polish on gold.
US crude was up 41 cents to $61.92 a barrel after falling more than 4 percent on Monday following a four-day slide that reflected easing tension as Iran, the world's fourth-biggest oil exporter, released 15 British sailors and marines. Ellison Chu of Standard Bank London in Hong Kong said sentiment on the US dollar could turn negative over time on concerns about the direction of US interest rates.
"I think the data last Friday from the United States was not that bad, so it gave some help to the US dollar, but it's quite conflicted these days on signals from the States. Sometimes its good and sometimes its bad and we still worry about the interest rate movement," said Chu.
The dollar came under pressure on Tuesday, slipping from a six-week high against the yen - hit after better-than-expected US jobs data last week - as investors took profits ahead of a meeting of Group of Seven finance officials later in the week.
"I think most people think the dollar cannot stand on the strong side for a long time." The market is also waiting for Wednesday's release of minutes from the US Federal Reserve's March monetary meeting, when it left benchmark overnight rates at 5.25 percent but dropped a phrase from its post-meeting statement pointing to further policy tightening ahead.
A Reuters poll showed most Wall Street analysts expect the Fed to start cutting rates this year, but some pushed back the timing for an easing after Friday's jobs data showed a resilient labour market.
The Australian dollar rose to its highest since 1990 after economic data fanned speculation that Australia's central bank will increase interest rates next month. This means it takes fewer Australian dollars to buy US dollar-denominated bullion.
"That suddenly gave Australian gold buyers more buying power," a dealer said. In Australian dollars, gold cost A$821.15 an ounce. In Tokyo, the benchmark February contract jumped 17 yen from the last settlement to 2,611 yen. Platinum was up slightly at $1,255 an ounce. Silver was higher at $13.83/13.88 an ounce. Palladium was at $355.00 an ounce from $352.50/356.00 in late New York trading.
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