Gold prices gained some ground on Wednesday, as the U.S. dollar was trading near nine-year highs against a basket of other major currencies. Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.47% to $1,187.40.The February contract ended Monday's session 1.12% lower at $1,181.90 an ounce.
Safe-haven demand strengthened after Greek Prime Minister Antonis Samaras said on Monday that he will recommend parliamentary elections are held on January 25, almost 18 months before his coalition's term was due to end. Samaras failed in his third attempt to persuade lawmakers to back his candidate for head of state, forcing the legislature’s dissolution.Dollar remained supported after final data last week showed that U.S. gross domestic product rose 5.0% in the third quarter, exceeding expectations for a growth rate of 4.3% and up from 3.9% in the three months.
Data fuelled further optimism over the strength of the U.S. economic recovery and added to expectations for the Federal Reserve to raise interest rates next year.Higher U.S. interest rates would boost the greenback and weigh on gold, which has benefited from central bank liquidity and a low interest rate environment since the 2008 financial crisis.The U.S. dollar index, which measures the greenback against a basket of six major currencies, was steady at 90.55, not far from the nine-year high of 90.66 hit overnight.
Trading volumes were expected to remain light this week ahead of the New Year's holiday.
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