Gold rebounded on Monday from 5-1/2 month lows as the dollar shed some of the hefty gains made the previous week on bets that US President-elect Donald Trump's plans for fiscal stimulus would prove inflation. Those assumptions have driven Treasury yields higher, denting interest in non-yielding bullion while boosting the US currency. But as the dollar took a breather on Monday, after climbing for 10 straight sessions against a basket of major currencies, gold clawed back some lost ground. Lower prices are also tempting some consumers of physical gold back to the market, dealers said.
Spot gold was up 0.3 percent at $1,212 an ounce by 2:59 pm EST (1959 GMT), while US gold futures for December delivery settled up 0.09 percent at $1,209.80. "I think there's probably a re-evaluation of the pro-risk mentality that we've seen over the last couple of weeks. Very little has actually changed," Mitsubishi analyst Jonathan Butler said."
The euro rose from an 11-month low against a broadly weaker dollar, with political developments seen easing uncertainty surrounding next year's German and French elections. Gold has fallen more than $120 from its post-US election peak on November 9 as US Treasury yields posted their biggest two-week rise in more than five years and the dollar shot higher.
Investors' appetite for gold showed signs of slackening. Last week, holdings of the world's biggest gold-backed exchange-traded fund, SPDR Gold Shares, saw its biggest weekly outflow in four months. "ETF investors... are continuing to withdraw capital on a massive scale," Commerzbank said in a note. "On Friday, there were renewed outflows of eight tons, and of nearly 71 tons in the last seven days of trading. That is the most pronounced outflow since July 2013."
Meanwhile in India, the second largest consumer of the precious metal, gold premiums jumped to two-year highs last week as jewellers ramped up purchases on fears the government might curb imports after withdrawing higher-denomination notes from circulation.
Among other precious metals, silver was down 0.2 percent at $16.55 an ounce, helping to lift the gold/silver ratio to 73, the highest since late-June. "That's what boosted gold; you're buying gold and selling silver," said Phillip Streible, senior commodities broker for RJO Futures in Chicago. Platinum was 1.6 percent higher at $93.10 and palladium was up 0.3 percent at $726.78.
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