Gold rises further as dollar’s safe-haven appeal fades

Bengaluru — Gold prices nudged up on Thursday as the dollar softened amid easing China-US trade fears and ahead of next week’s US Federal Reserve meeting.

Spot gold was up 0.2% at $1,203.86 at 3.47am GMT, after rising 0.5% in the previous session.

US gold futures were up 0.2% at $1,210.20 an ounce.

“The risk (sentiment) is sort of flattening, but that’s also taking wind out of the safe-haven appeal of the US dollar (helping gold),” said Stephen Innes, Asia-Pacific trading head at Oanda.

“For gold to break $1,210, we need to see the dollar weakening against the emerging market currencies as well as the euro.

“However, there is not much of a safe-haven appeal (for gold) as the market is not packing in a lot of punch to trade war.”

Earlier this week, Washington imposed 10% tariffs on Chinese goods worth $200bn, while China retaliated with levies on about $60bn worth of US goods at scaled-back rates.

Investors have been buying the dollar believing the US has less to lose from the dispute. However, a spot of weakness in the dollar indicated that worries over trade tensions have eased as the tariffs were seen to be at lower levels than some had feared.

The dollar index was hovering near a seven-week low against a basket of major currencies.

Gold dropped about 11.6% from a peak in April, affected by the intensifying US-China trade dispute and on rising US interest rates.

Investors are awaiting next week’s Federal Reserve meeting.

The US central bank is widely expected to raise benchmark interest rates and shed light on the path for future rate hikes.

“Recent Fed commentary has implied a steady pace of tightening so anything that calls that into question will be positive for gold,” said Nicholas Frappell, global general manager, ABC Bullion, Australia.

Gold has been stuck in a range between $1,215 and $1,187 for the past three weeks, with investors looking for a technical breakout on either side for further moves.

“The market gives the outward appearance of remaining range-bound and hasn’t yet done enough on the upside to alter this appearance.

“However, over the short term, prices would strengthen to$1,211 and a break above could see $1,221,” Frappell said.

Among other precious metals, spot silver rose 0.8% to $14.32 an ounce.

Palladium climbed 0.2% to $1,036.50, hovering near a five-month high of $1,041.70 hit on Wednesday. Platinum gained 0.3% to $823.40, after hitting its highest since August 13 at $826.40 in the previous session.

Reuters