By Rachel Koning Beals
Gold prices closed up modestly on Tuesday as weakness in the U.S. dollar delivered a boost to the yellow metal.
December gold GCZ6, +0.13% rose $5.40, or 0.4%, to settle at $1,346.70 an ounce, ending two consecutive sessions of losses for gold.
Technical traders said some short-covering, or buying back borrowed securities to close an open short position, emerged in the futures market to account for some of Tuesday’s rebound.
Gold prices have been subdued since last week’s stronger-than-expected July jobs report pushed down precious metals prices as expectations for a U.S. interest-rate hike in 2016 increased. So far this month, gold futures are off about 0.8%, but year to date are up 27%, underpinned by global economic uncertainty and bets that the rates will stay lower for longer.
The CME Group’s Fed Watch tool, which tracks pricing in short-term interest-rate futures, puts the chance of a rate increase by year-end at about a coin toss. That is up from a 30% chance for such a scenario priced in before last week’s stronger-than-expected July jobs report. Tuesday’s relatively thin economic calendar could extend the wait for fresh, market-moving data.