Gold dropped Wednesday, after hitting its highest in more than a week in the previous session, as the dollar steadied amid uncertainty over the U.S. presidential election results and on an expected rate hike by the U.S. Federal Reserve. Spot gold edged down 0.1 percent to $1,261.71 an ounce at 0549 GMT. In the previous session, the precious metal touched $1,264.78, its highest since Oct 10. U.S. gold futures was down 0.1 percent at $1,262.6 an ounce. Recent support for gold prices has had to do with the demand mostly from China and emerging markets, said Richard Xu, a fund manager at HuaAn Gold, China's top gold exchange-traded fund. "If you look at the Chinese local gold prices, they are roughly 2 percent higher than the global gold prices," Xu added. "The dollar is probably showing some kind of a weakness after pushing out so high, so that might also help the gold stabilize for a while." The dollar index narrowed losses and was firm at 97.895. The dollar stepped back from a seven-month high against an index of currencies on Wednesday after U.S. consumer prices showed a moderation in underlying inflation, prompting markets to trim bets on a December Federal Reserve rate hike. A Reuters poll showed chances the Federal Reserve will raise interest rates in December are now put at 70 percent. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Spot gold may test resistance at $1,266 per ounce, as suggested by its wave pattern and Fibonacci projection analysis, according to Reuters technical analyst Wang Tao. Asian shares rose for a second session as a barrage of Chinese data confirmed that the economy had stabilized. "We remain relatively negative on gold short-term despite a stronger start to the week," INTL FCStone analyst Edward Meir said in a note. "We expect further dollar strengthening going into Q4 on account of an election victory for Hillary Clinton along with the likelihood of a Fed rate hike." Among other precious metals, spot silver climbed 0.1 percent to $17.65 an ounce. It hit a more-than-one-week high of $17.71 on Tuesday. Platinum and Palladium were mostly flat at $942 and $638.25, respectively. Source: Reuters
