• Gold prices edged up on Wednesday as buoyant physical demand from major consumers China and India offset the impact of a stronger U.S. dollar.
• Spot gold XAU= was up 0.3 percent at $1,162.68 an ounce by 0639 GMT. Prices touched their highest in three weeks on Tuesday at $1,163.52.
• "Physical demand from China and India is quite strong at the moment," said NAB analyst Vyanne Lai.
"With the upcoming Chinese New Year there is a seasonally strong period for jewellery and in India the shortage of cash has prompted some safe-haven buying from Indian consumers as source of wealth."
She added that policies of President-elect Donald Trump in the United States had been stoking appetite for gold as a hedge against inflation, despite the strong U.S. dollar.
• Holdings of the SPDR Gold TrustGLD , the world's largest gold-backed exchange-traded fund, dropped1.01 percent to 813.87 tonnes on Tuesday. Holdings are down about 14 percent since the U.S. presidential election in November. GOL/ETF
"We expect ... appetite to remain cautious at least for the time being," said Barnabas Gan, an analyst at OCBC Bank in Singapore.
• NAB's Lai said that if bond yields and stock prices rose, then demand for gold would likely diminish over the year.
"If the (U.S.) rate hike frequency picks up we are likely to see bond prices rise further, that would in turn encourage investors to switch out of ETFs into alternative assets."
Meanwhile, silver XAG= was up 0.6 percent at $16.37 an ounce, after hitting near three-week highs in the last session
Reference: Reuters
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