By Amanda Cooper
Reuters
Gold rallied on Tuesday, boosted by a rise in the euro against the dollar after the price hit its lowest in nearly six months last week in a flurry of year-end speculative selling.
Mounting tensions between Iran and the United States over a possible disruption to oil supply boosted crude oil futures but did little to elicit any safe-haven buying of gold, which remains tightly tethered to the ebb and flow of the euro.
Gold's correlation with the euro/dollar exchange rate is at its most positive in nearly two years, meaning the bullion price is more likely to move in lockstep with the euro than at any other time since January 2010.
German Bund futures slipped but the debt crisis was expected to limit falls as refinancing pressure grows on the bloc's lower-rated sovereigns, while the euro edged higher after better-than-expected Chinese data boosted riskier assets.
Speculators placed their heaviest bets ever against the single European currency last week, in light of the lack of a lasting solution to the euro zone debt crisis and the knock-on effect on the regional economy.
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