Gold advanced on Friday as long term buyers bought the dip after bullion tumbled to its lowest level in more than a year in the previous session. Spot gold was 0.8 percent higher at 3909.30 dollars an ounce as of 10:49 a.m. Singapore time, and silver rose 1.1 percent to 50.56 dollars, Bloomberg reported.
Bullion had slumped more than 6 percent over three sessions, triggered by a faster than expected rise in US consumer prices and comments from Federal Reserve officials backing more aggressive tightening. Traders are pricing a quarter point Fed increase in December, with an outside chance of a half point move, and some see hikes extending beyond December.
The decline at the end of the New York session correlated with rising bond yields, Rajeev De Mello of GAMA Asset Management said. Gold previously tested this zone in July and in late October, with demand from central banks, large institutional buyers and Chinese households supporting prices.
Site tables put gold futures at 3895.1 dollars, up 0.25 percent on the day in the morning snapshot, still below the 4000 dollar level the metal surrendered on Thursday. The rebound is dip buying, not a reversal of the rates story.