Gold was little changed on Tuesday in light trading as investors were slow to return from the holidays, with European and other major metals markets closed since late last week for Christmas. With the dollar holding firm against other major currencies, and long positions in gold futures winding down, traders expected the market to remain subdued until the new year.
When players return in full force and key data is due for release. US jobs figures are out in early January. Expectations for more central banks to start purchasing gold to stock up their reserves and diversify allocations, along with views that the dollar will stay pressured due to prospects for prolonged low US interest rates, will keep support firm for bullion, analysts said.
There is also an indication that excessive long positions in gold futures have somewhat been cleared while many dollar short positions have also been covered, paving the way for gold to test new highs early in 2010, said Koichiro Kamei, managing director at financial research firm Market Strategy Institute. Many Japanese companies are on New Year's holidays until January 4. Non-commercial net long US gold futures positions fell 7 percent to 238,076 contracts in the week to December 22 from 256,108 lots, a weekly report by the US.