Gold edges higher, awaiting direction on US rates

Gold is often seen as an alternative investment during times of political, financial uncertainty such as US Presidential elections in Nov

Gold was on track to end the week barely changed as the market awaited more signs about the timing of an expected US interest rate rise from the Federal Reserve.

Spot gold was up 0.2% on Thursday at $1,269.21 an ounce by 1430 GMT while US gold futures rose by a similar margin to $1,269.70 per ounce. It has traded in a range of around $16 over the last week.

"There is a lack of impulse to be able up push prices higher. The billion dollar question is still 'when is the Fed going to hike,'" Quantitative Commodity Research analyst Peter Fertig said.

Gold is often seen as an alternative investment during times of political and financial uncertainty such as the US Presidential elections in November, while higher interest rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which gold is priced.

Bets that the Fed will hike rates have driven the dollar to nine-month highs against a basket of currencies this week and limited gains in gold. The dollar index was flat on Thursday.

But higher physical demand from India, the world's second-biggest consumer of gold, is helping prices and preventing a selloff ahead of an expected interest rate rise in December, analysts say.

Festivals in India, such as Diwali and Dhanteras when gold is traditionally given as gifts, are approaching.

"Physical demand from Asia continues to underpin the market at present, with gold continuing to consolidate for the time being between $1,250-75," MKS PAMP Group trader Sam Laughlin said.

According to estimates from Macquarie, Chinese gold imports in September jumped 58% to $6 billion or 118 tonnes compared to August, but are down 25% from a year ago.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.49% to 942.59 tonnes on Wednesday.

The market will look to third-quarter UK GDP data and data from the US later in the day for the latest economic signals.

Silver was up 0.2% at $17.61 an ounce, while platinum was flat at $961. Platinum rose to an over two-week high of $970.80 on Wednesday.

Palladium fell 1.5% to $612.40 per ounce.