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Gold prices rise as Fed rate tone weakens dollar

Reuters  |  BENGALURU 

By Suresh Namboothiri

BENGALURU (Reuters) - Gold prices climbed on Friday as the dollar fell back on expectations may pause interest rates hikes if the U.S. economy slows this year, while investors awaited on progress in the Sino-U.S. trade talks.

Spot gold rose 0.4 percent to $1,290.84 per ounce as at 0310 GMT, heading for a fourth straight weekly gain. The is up 0.4 percent so far this week.

U.S. gold futures were up 0.3 percent at $1,290.8 per ounce.

"The weaker dollar and a more dovish Fed are the two most alluring factors for gold," said Stephen Innes, at

"There are concerns for the U.S. economy to slow down, perhaps towards the end of 2019 and into 2020, so the markets are pricing rate cuts."

The dollar slipped against other major currencies, after having rebounded from three-month lows on Thursday following Federal Reserve Jerome Powell's comment which suggested the central is not done tightening monetary policy just yet.

A partial shutdown extended into its 20th day and provided little comfort to the U.S. currency, after threatened on Thursday to use emergency powers to bypass to pay for a wall on the U.S.-border.

"The (gold) market is holding back a little as they are concerned the equity market could rally significantly on trade war truce," Innes said.

Asian equities inched up to one-month highs, but the rally's momentum slowed partly as investors sought more clarity on whether the and could make headways on their talks on trade as well as intellectual property rights.

"Dilemma over the U.S.-Sino trade dispute is still raising eyebrows and needs clarity," said Sugandha Sachdeva, vice-- metals, and currency research, Broking Ltd.

"Once trade issues are resolved, the dollar is likely to remain suppressed, losing its appeal as a safe haven...Gold on the other hand would stand to benefit."

Also aiding gold's upward trend are concerns of weakening global growth, further emphasised by sombre data out of and on Thursday.

"Gold will likely approach the short term resistance of $1,310 per ounce, from where some profit-booking can be seen," said Broking'S Sachdeva, adding that near term support can be seen at $1,275 per ounce.

Spot gold is expected to retest a resistance at $1,299 per ounce, with a good chance of breaking above this level and rising further to $1,311, according to

Palladium 0.4 percent to $1,326.75 per ounce, and was up about 2 percent for the week.

Silver climbed 0.6 percent to $15.65. However, it was poised to snap three sessions of weekly gains.

Platinum was up 0.2 percent at $821.60 per ounce.

(Reporting by Suresh Namboothiri and in Bengaluru; Editing by Sunil Nair)

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

First Published: Fri, January 11 2019. 09:08 IST