Gold recovers from biggest dip in 5 months after Fed rate rise

LONDON: Gold rose on Friday, recovering from its biggest daily loss in five months as stocks and the dollar retreated, but remained near multi-year lows after the Federal Reservelifted US interest rates for the first time in nearly a decade.

The metal has recovered some lost ground after bottoming out on Thursday at $1,047.25 an ounce, within a few dollars of a near six-year low reached on December 3.

Spot gold was up 0.8 per cent at $1,059.80 an ounce at 1436 GMT, while US gold futures for February delivery were up $9.30 an ounce at $1,058.90.

The rate hike sparked a surge in the dollar and global stocks on Thursday, but led to a 2 per cent slide in gold. Rising rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Gold has tumbled 11 per cent this year as investors awaited the rate rise. Now that it is out of the way, attention is turning to other factors.

"Next year the macro picture is looking a little less negative for gold and precious," Mitsubishi analyst Jonathan Butler said. "It's hard to see, without a significant under-performance in the yen and the euro, how the dollar is going to rally very strongly next year."

"The Fed, from its forecasts, is anticipating four rate rises next year. The markets are saying something different - the Fed funds futures currently suggests there'll be just two rises, in June and December."

In other markets, global stocks fell and the dollar slipped 0.2 per cent, taking pressure off gold.

The metal could revisit $1,000 an ounce for the first time in six years if it breaks below its early December low at $1,045 an ounce, according to technical analysts.

"If we can take the low out, which I don't think is unreasonable, $1,033 is the next stop - that's the high from 2008 - and then $1,006, and the $1,000 figure is really the level you should be talking about," Credit Suisse analyst Christopher Hine said.

"It is achievable (by the end of the year)," he said.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, fell another 4.5 tonnes on Thursday to 630.17 tonnes, the lowest since September 2008. That brings its monthly outflow to 25 tonnes.

Silver was up 1.5 per cent at $13.90 an ounce, while platinum was up 0.8 per cent at $850.20 an ounce and palladium was down 0.5 per cent at $551.24 an ounce.