By Karen Rodrigues
BENGALURU (Reuters) - Gold hit a two-week high on Thursday, supported by a weaker dollar and trade worries between Washington and Beijing, even as the U.S. Federal Reserve forecast a slightly faster pace of interest rate hikes this year.
Spot gold rose 0.3 percent to $1,302.50 per ounce at 0744 GMT. It earlier hit a high of $1,303.38 an ounce, its best since May 31.
U.S. gold futures for August delivery rose 0.4 percent to $1,306 per ounce.
Dollar is under pressure, so gold is doing well this morning, a Hong Kong-based trader said.
The dollar index, which measures the greenback against a basket of six major currencies, was down 0.4 percent at 93.388.
"Reports that President Trump was preparing to put tariffs on billions of dollars of Chinese goods as soon as Friday raised concerns in the market that economic growth would be impacted. This saw some safe-haven buying emerge," ANZ said in a note.
"Investor demand was also supported by a slightly weaker U.S. dollar in the wake of the Fed decision to raise interest rates," ANZ said.
The U.S. Federal Reserve raised interest rates on Wednesday, and signalled two additional hikes by the end of this year, compared to one previously.
"It (rate hike) is all priced in and obviously there are a lot of uncertainties looking past this which is supporting gold prices in our view," said Richard Xu, a fund manager at HuaAn Gold, China's biggest gold exchange-traded fund.
"Its muted response to the Federal Reserve increase is because a lot of safe haven demand is going to take place... The trade war drama is not going to end anytime soon, it is probably going to be exasperated over the next month or so."
Meanwhile, China's central bank left borrowing costs for interbank loans unchanged on Thursday, an unexpected decision that shrugged off the U.S. Federal Reserve's increase in its benchmark rate overnight.
The decision came as China reported "shockingly weak" activity data for May.
In other precious metals, silver climbed 0.6 percent to $17.09 an ounce, having earlier hit $17.14 an ounce, its highest since April 20.
Platinum was 0.5 percent higher at $903.20 an ounce, while palladium gained 0.2 percent to $1,010.85 per ounce.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)