(MENAFN- The Peninsula) Gold fell more than one percent yesterday after an interest rate cut from China helped global markets rebound from the previous day's rout, with European stocks rising four percent and the dollar also gaining. US markets opened sharply higher as buyers snapped up stocks a day after Wall Street suffered its biggest one-day drop in four years.
Spot gold was down 1.1 percent at $1,141.56 an ounce at 1357 GMT, while US gold futures for December delivery were down $11.90 an ounce at $1,141.50.
Gold had already fallen on Monday, with some traders citing liquidation to cover losses on other markets as a plunge in Chinese equities sent world stocks and commodity prices tumbling and knocked the dollar.
That pulled gold back from a seven-week high hit earlier this month after minutes of the Federal Reserve's last policy meeting dented expectations for an imminent rise in US rates.
"If you look at the last week, the big reaction in gold has been to the Fed, not because of risk aversion," ABN Amro analyst Georgette Boele said. "There may still be some safe-haven demand, but that is no longer a dominant factor."
"Today you've had a turnaround in markets, you've had a dollar recovery as well, reasonably good US data and the action out of China. You've seen gold prices under pressure."
Gold has rebounded sharply from the 5-1/2-year low it hit in July on the back of expectations that the Federal Reserve was on track to raise interest rates this year for the first time in nearly a decade, lifting the opportunity cost of holding gold and boosting the dollar.
While those expectations have receded after a dovish reading of the minutes of the Fed's last policy meeting and on fears of a broader global economic slowdown, they are keeping a lid on gold's gains. "We're still in an environment where we know US interest rates will go up," Standard Chartered analyst Nicholas Snowden said. "For gold, that limits how much of a bid you will see, even with the sort of financial market turmoil that ensued yesterday."
Palladium was at $540 an ounce, down 5.4 percent, after falling as much as seven percent to its lowest in five years at $528.50 an ounce.
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