Gold Inches Up As The Low Price Boosts Investor's Demand

Precious gold inched up on Tuesday trading as the drop in price encouraged some demand on the metal which also took advantage of the fall in the U.S. dollar.

The shiny metal fell to its lowest level over the previous four months on Friday following dovish comments from the Fed that expressed that policy makers will end an $85 billion of asset purchases some time in 2013 on fears of its negative impact on financial markets. Yet, gold is trying to recuperate some of its losses as the nonfarm payrolls report released on Friday although showed improvement in hiring by American employees it showed a rise in unemployment to 7.8% which would probably force the Fed to continues its monetary easing till shoring up the rate to sustainable levels.

Today, it rebounded slightly to trade around $1648.60 an ounce after touching a high of $16542.82 and a low of $1646.56.

The trading range for today is expected among the key support at $1600.00 and key resistance now at $1675.00. The low price is encouraging some selling from investors who bet on a rebound as central banks are likely to keep their ultra-low interest rate and stimulus this year to boost their economies thereby enhancing demand on the yellow metal as an inflation hedge and store of value.

On the other hand, gold benefited from the fall in the dollar which plunged against a basket of major currencies, as indicated by the Dollar Index, to hit a low of 80.11 from the day's opening level of 80.23.

Crude oil for February's delivery retreated to trade around $93.11 a barrel from the day's opening of $93.29.

Among other precious metals, sliver soared to $30.21 from the day's opening of $30.00, platinum surged to $1547.25 from $1539.50, and palladium edged up to $682.25 from $679.25.

Later in the week, eyes will track both ECB and BOE as they announce their first monetary decision in the new year with expectations of seeing a hold in monetary policy this month.