LONDON, Dec 16: Gold dipped on Tuesday as traders took profits after the previous session’s two-month highs and as the dollar lifted from lows against the euro, but trading was muted ahead of a US interest rate decision.

A decision by the Federal Open Market Committee to cut interest rates would augur well for gold.

Spot gold eased to $833.10/835.10 an ounce at 1044 GMT, down from $837.80 an ounce in New York late on Monday.

The precious metal rose more than 2 per cent in that session, hitting a peak of $844.20, its strongest level since October 16.

That lowers the opportunity cost of holding gold and (adds to) the growing sense that all currencies are looking unattractive. The only alternative to currencies is gold.

Gold is often bought as an alternative asset to the dollar and tends to move in the opposite direction to it.

The other main external driver of gold, oil, was a touch firmer, however, lending a little support to the market.

Stronger oil prices support interest in commodities as an asset class, and can boost buying of gold as an inflation hedge.

Interest in gold exchange-traded funds remains firm. The world’s largest gold ETF, the SPDR Gold Trust said its holdings rose by just over three tons on Monday.

Among other precious metals, platinum was steady at $821/841 an ounce, against $817 in New York late on Monday. Palladium was at $171.50/179.50 an ounce from $171.

Platinum reached parity with gold for the first time since 1996 on Thursday, and is holding just below the yellow metal.

Platinum prices may fall further on worsening auto sales figures, but production cuts must surely start to turn the market around, Fairfax analyst John Meyer said.

Platinum is significantly more expensive to produce than gold and its concentration in South Africa, where mining costs continue to rise, makes the metal sensitive to the South African rand.

Sooner or later platinum prices must surely pick up, unless we all suddenly convert to battery powered cars. Spot silver was quoted at $10.58/10.66 an ounce, down from $10.62 an ounce.—Reuters