Gold advances in Europe

Gold rebounded on Tuesday as investors anticipated signals on the direction of US monetary policy from the minutes of a Federal Reserve meeting held in November. Spot gold was up 0.5 percent at $1,283.03 per ounce, as of 1504 GMT. The metal fell about 1.4 percent on Monday in its biggest one-day percentage drop since September 11. US gold futures for December delivery gained 0.6 percent to $1,282.80.
"The Fed rate hike in December is roughly priced in and unless there are very hawkish minutes, it's more that people are looking for direction about future moves," said Georgette Boelle, a commodity strategist at ABN AMRO. The minutes are due on Wednesday. "It seems likely that we will have more rate hikes next year which is negative for gold but Fed will want to see evidence that inflation is picking up to really be confident in the interest rate hike path," said Danske Bank analyst Jens Pedersen.
Gold was also profiting from a political crisis in Germany, Europe's largest economy, boosting bullion's safe-haven appeal. German Chancellor Angela Merkel said she would prefer a new election to leading a minority government after talks on forming a three-way coalition failed. The dollar index, which measures the currency against a basket of its peers, eased, while world stocks inched higher.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. Fed Chair Janet Yellen said on Monday she would resign her seat on the Board of Governors once Jerome Powell was confirmed and sworn in to replace her.
Traders were also keeping an eye on safe-haven demand for gold after US President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday. BMI Research lowered its gold price forecast slightly to $1,300 per ounce in 2018 and $1,325 in 2019. "(This is) driven by our view that the US Fed will hike rates by more than is reflected in the market," the researcher said in a note, adding inflation and political risks in 2018 would keep gold prices supported.
Silver climbed 0.6 percent to $17 an ounce and platinum was up 0.7 percent at $931.60. Palladium gained 0.3 percent to $991.60 an ounce. On Monday, silver fell 2.3 percent, its biggest one-day percentage fall since September 26, while platinum lost nearly 3 percent, marking its worst day since early May. The global platinum market deficit will rise sharply next year thanks to resurgent demand from the jewellery and industrial sectors and declining production, an industry report said on Tuesday.