Gold holds firm on subdued dollar

BENGALURU: Gold prices were steady in holiday-thin trade on Thursday after hitting a two-week peak in the previous session, with improved risk appetite weighing on the U.S. dollar.

Spot gold was 0.1 percent higher at $1,227.25 per ounce at 0742 GMT. Prices on Wednesday marked their strongest since Nov. 7 at $1,230.07 per ounce. U.S. gold futures were flat at $1,227.6 per ounce.

“The market is a bit slow today with low volume due to the Thanksgiving holiday… The dollar is slightly on the downside, giving some support to gold,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

The dollar drifted lower on Thursday as demand for safe-haven currencies remained subdued after a rebound in global equities.

Meanwhile, Asian shares seesawed in cautious trading with China extending losses as investors fretted about slowing global growth in the face of rising U.S. interest rates and trade tensions.

The dollar has been under pressure this week as cautious comments by Fed officials about a potential global slowdown raised doubts on the pace of interest rate hikes.

The doubts were heightened by data released on Wednesday that showed weekly jobless claims rose to a more than four-month high and new orders for U.S.-made capital goods were unexpectedly flat in October.

“We are seeing some impact of the weaker than expected durable goods number, which has reinforced investors to question their expectations of rate hikes in 2019 and weaker dollar followed,” said ANZ analyst Daniel Hynes.

A fourth rate hike for this year is expected next month and policymakers had earlier indicated two more by June 2019.

Prospects of higher U.S. interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding bullion.

Gold has been holding up well amid a weaker dollar, geopolitical tensions like Brexit and the U.S.-China trade war and an unconvincing stock market, said Brian Lan, managing director at Singapore dealer GoldSilver Central.

Spot gold may end its bounce around a resistance at $1,231 and then test a support at $1,211 per ounce, according to Reuters technical analyst Wang Tao.

Indicative of investor sentiment toward bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.27 percent to 762.92 tonnes on Wednesday.

Among other precious metals, silver was little changed at $14.49 per ounce.

Platinum rose 0.5 percent to $845 per ounce, while palladium was up 0.2 percent at $1,149.77.