Gold price near most volatile since January

Holdings in gold-backed funds are near the lowest since 2009

Gold traded little changed as investors weighed oil prices and the strength of the dollar and as a gauge of the metal’s price swings was near the highest since January.

Gold fell 2.2 percent in London last week for the first loss in three. Bullion futures’ 60-day historical volatility is near a level of 18.1 set Dec. 16, data compiled by Bloomberg show. The Bloomberg Dollar Spot Index slipped 0.1 percent today and Brent crude gained a second day.

The metal, which reached a four-year low last month, is down 0.4 percent this year. Holdings in gold-backed funds are near the lowest since 2009 as the dollar trades near a five-year high on the outlook for higher U.S. interest rates and after slumping oil prices reduced demand for an inflation hedge.

“Gold is likely to take cues from the dollar, equities and crude oil,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a note today. “With Christmas and New Year holidays approaching, market participation is likely to dry out. Less participation could also lead to erratic and volatile moves.’”

Gold for immediate delivery gained 0.1 percent to $1,197.11 an ounce by 9:26 a.m. in London, according to Bloomberg generic pricing. Gold for February delivery rose 0.1 percent to $1,196.90 on the Comex in New York.

Futures trading volumes were 38 percent lower than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.

Interest rates

Fed Chair Janet Yellen said last week that policy makers are likely to hold key rates near zero at least through the first quarter, even as the U.S. economy strengthens. The Fed last week replaced a reference to rates staying low for a “considerable time” with a pledge to be patient on the timing.

“Considering that the dollar has gained across the board, gold has been holding up extremely well,” Dominic Schnider, an analyst at UBS Group AG’s wealth-management unit in Singapore, said by phone. “There’s still some physical interest from Asia.”

Holdings in gold-backed exchange-traded products climbed 3.2 metric tons as of Dec. 19, the first advance in six days.

Silver for immediate delivery was little changed at $16.0788 an ounce in London. Platinum was unchanged at $1,198.88 an ounce. Palladium lost 0.1 percent to $805.22 an ounce.

©2014 Bloomberg News

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