Gold edges up from six-month lows as the dollar slips

London — Gold prices edged up on Friday from six-month lows as the dollar slipped, but the modest nature of the recovery suggested speculators might still be poised to punish the metal further.

Spot gold was up 0.2% at $1,268.65 an ounce, by 10.17am GMT. In the prior session, bullion touched $1,260.84, its lowest since December 19 2017. US gold futures for August delivery were unchanged at $1,270.50 an ounce.

“Gold has not moved a lot higher and that worries me. If the dollar is weaker and gold is not reacting much, that’s usually a bad sign, that means you’ll probably get more downside,” said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam. “People think that since gold failed at the $1,300 level, they are seeing how far they can push it down and then move it up again. I would say it should bottom out anywhere between $1,250 and $1,200.”

Gold tumbled last Friday after repeatedly failing to surmount the $1,300 level as speculators rushed to liquidate long positions and others put on bearish positions.

The dollar pulled back from an 11-month peak against a basket of major currencies on Friday, as the euro strengthened after a survey showed eurozone private business growth recovered in June. A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.

Commerzbank agreed that gold was unlikely to recover in the near-term even with potentially destabilising events, such as the Turkish presidential election on Sunday and an EU summit later next week. “If gold is not even in demand as a result of the escalating trade dispute between the US and China, we do not believe that the other upcoming events will do much to sway the opinion of market participants,” a note from the German bank said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.5% to 824.63 tonnes on Thursday.

Automotive catalyst metals platinum and palladium rose 0.1% to $862.65 and added 0.8% to $958.80 an ounce, respectively, but were headed for weekly declines of more than 2%. Earlier in the session, platinum touched $851.74, the weakest since February 2016, while palladium slipped to a seven-week low of $947.15 an ounce.

Silver gained 0.7% at $16.43 an ounce after falling to its lowest since May 2 at $16.16 in the previous session.

Reuters