Gold steadied near $1,200 an ounce on Wednesday as a rise in oil prices provided support, but strength in the dollar and optimism about the US economy weighed on the metal's appeal as a hedge. Bullion also got some help from inflows of 2.4 tonnes into SPDR Gold Trust, the world's top gold-backed exchange-traded fund. Despite the first inflow in two weeks, the fund's holdings are sitting firmly near a six-year low, underlining bearish sentiment in the market.
Spot gold edged up 0.2 percent to $1,200.60 an ounce at 0728 GMT after falling 1 percent in the previous session. "Precious metal prices have been out of favour since July. For starters, the US dollar has rallied. Moreover, inflation expectations have fallen substantially because of a sell-off in oil prices," ABN Amro analyst Georgette Boele said in a note.
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