Gold inches up on easing dollar, global concerns

By Eileen Soreng

BENGALURU (Reuters) - Gold prices edged higher on Monday towards a 2-1/2-month peak hit last week as the dollar eased and worries over rising political tensions and slowing global economic growth lent support to the metal.

Spot gold was up 0.1 percent at $1,226.43 an ounce at 0745 GMT. On Oct. 15, the bullion touched its highest since July 26 at $1,233.26.

U.S. gold futures were up 0.1 percent at $1,229.40 an ounce.

"So far we are seeing a good recipe for gold prices to recover. One is global economic slowdown, another is geopolitical uncertainties," said Argonaut Securities analyst Helen Lau.

"If the tensions loom large we could see gold rebound through 1,300."

The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists who said the U.S.-China trade war and tightening financial conditions would trigger the next downturn.

Geo-political concerns including tensions between Saudi Arabia and the West over the killing of journalist Jamal Khashoggi, developments related to Brexit, and Italy's budget woes are keeping investors interested in gold, analysts said.

Gold is seen as a safe store of value during political and economic uncertainty.

"Trade concerns between the U.S. and China remain elevated and the ongoing U.S.-Saudi tensions are likely to continue to underpin a bid tone for bullion over the near-term," MKS PAMP Group traders said in a note.

"Supportive price action around $1,210-$1,220 should restrict declines amid current global political uncertainty, while a test through $1,230-$1,235 will likely squeeze further shorts out of the market and see gold toward $1,250."

Gold speculators cut their net short position in COMEX gold contracts by 65,637 contracts to 37,372 contracts, the smallest since late July, in the week to Oct. 16, data showed.

Spot gold may either consolidate further below a resistance at $1,235 per ounce, or break a support at $1,217, to fall to the next support at $1,208, according to Reuters technical analyst Wang Tao.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.39 percent to 745.82 tonnes on Friday.

The U.S. dollar, which measures the greenback against a basket of six major currencies, was down 0.2 percent.

Among other precious metals, silver was up 0.4 percent at $14.65 per ounce, while platinum rose 0.8 percent at $836.20 per ounce.

Palladium climbed 0.9 percent to $1,089.80 per ounce, closer to an over eight-month peak of $1,096.80 hit on Oct. 11.

(Reporting by Eileen Soreng and Vijaykumar Vedala in Bengaluru; Editing by Subhranshu Sahu and Vyas Mohan)