Gold rises to one-week peak on support from a softer dollar

Bengaluru — Gold prices rose to a one-week high early on Wednesday, rebounding from a seven-month low touched in the previous session, as the dollar softened, stoking some demand for the metal.

Spot gold was up 0.3% at $1,256.23/oz as of 4.30am GMT. It earlier rose to as high as $1,260.43, a one-week high. The metal fell to its lowest since December 12 at $1,237.32 in the previous session. US gold futures for August delivery were 0.4% higher at $1,258.10/oz.

“Today, there’s very little happening ahead of the fourth of July holiday, but we are seeing some significant US dollar weakness come across the board against other currencies,” a Sydney-based trader said.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.1% at 94.536. A weaker greenback supports bullion as the dollar-priced commodity becomes less expensive for investors holding other currencies.

Meanwhile, Asian stocks were on shaky ground on Wednesday as the spectre of a China-US trade war haunted investors ahead of an July 6 deadline for US tariffs on billions of dollars worth of Chinese imports.

“Since the trade wars have been doing the rounds, if anything we’ve seen gold come lower. But if it continues to escalate, gold could go only one way and that’s higher,” the trader said.

China was putting pressure on the EU to issue a strong joint statement against President Donald Trump’s trade policies at a summit in July but is facing resistance, European officials said. Investors are also awaiting minutes of the June US Federal Reserve meeting which is due on Thursday and the US nonfarm payrolls data on Friday.

“Gold now has the potential to move back up to the $1,300 level, given market expectations appear to be becoming less hawkish on the interest rate outlook,” said Alasdair Macleod, head of research with Toronto-based Goldmoney.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (EFT) fell 0.73% to 803.42 tonnes on Tuesday.

In other precious metals, silver was up 0.1% to $16.04/oz.

Palladium gained 0.6% to $945/oz and platinum was 0.1% higher at $837.80/oz. Platinum fell on Tuesday to the lowest since December 2008 at $793.

Reuters