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Gold gains as risk aversion weighs on dollar


By Suresh Namboothiri

BENGALURU - Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion.

Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce.

"Markets are trying to consolidate, trying to push up higher for now," said Benjamin Lu, a with

A balance between a host of factors such as a rate hike by the in December, uncertainty about trade tensions between and Beijing, and a flattening yield curve has helped create a premium for the bullion, Lu added.

Fed policymakers will gather at a Dec. 18-19 meeting, at which the central is widely expected to raise interest rates.

"Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate hike timings in 2019," said Lukman Otunuga, a at FXTM, adding that: "if the meeting echoes a similar message to (Jerome) Powell's dovish shift, gold has the potential to shine into 2019."

The dollar declined against the safe-haven yen as a spike in risk aversion pressured equities and yields. The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates. [US/] [MKTS/GLOB]

"An yield curve inversion indicates higher borrowing cost in short term, so for safe-haven assets in the longer run it's going to be very positive," Phillip Futures' Lu said.

Spot gold may test a resistance at $1,245 per ounce, a break above which could lead to a gain into a range of $1,253-$1,258, according to

Meanwhile, palladium continued to be more valuable than gold after outshining the for the first time since 2002 on Wednesday, with prices soaring by around 50 percent in less than four months to record levels.

Spot palladium rose 0.1 percent to $1,245.00 per ounce, hovering near its record high hit in the previous session.

The market now awaits Friday's U.S. non-farm payrolls data for November, which is expected to show unemployment remains at 3.7 percent.

"Investors are seen adopting a cautious stance ahead of the U.S. jobs report which could offer insight over the health of the U.S. labour force," said FXTM's Otunuga.

Amongst other metals, silver fell 0.7 percent to $14.41 per ounce, while platinum extended losses into a third session, declining 0.7 percent to $795.00 per ounce.

(Reporting by Suresh Namboothiri in Bengaluru; Editing by Subhranshu Sahu)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, December 06 2018. 11:02 IST