Gold rises on weaker dollar; platinum group metals surge

Spot gold had risen 1.1% to $1,354.44, spot palladium surged 7.4% to $746.10

Gold rose more than 1% on Wednesday as the dollar fell on lower expectations for a U.S. rate hike after weaker economic data, while platinum and palladium climbed to their highest in over a year.

Spot gold > had risen 1.1% to $1,354.44 an ounce by 0653 GMT, after gaining 0.4% in the previous session.

U.S. gold was up 1% at $1,360.60 an ounce.

Spot palladium > surged 7.4% to $746.10 an ounce, the highest since June 2015. Platinum > was up 2.4% at $1,177.80, after rising to $1,182.20, its loftiest in over 16 months.

"The overall trend is positive in platinum group metals. Mine strikes and trade union problems in South Africa are supporting platinum prices and palladium is going with that," a Hong Kong-based precious metals trader said.

 

Platinum has risen over 32% so far this year, closely followed by palladium, which has gone up about 30%.

Gold, meanwhile, climbed after a report that U.S. worker productivity fell for a third straight quarter in the spring this year.

"It's a noisy trading without trend. With a falling dollar, we would see short term rise in gold and silver prices," said Jiang Shu, chief analyst at Shandong Gold Group.

"The dollar is due for a rising trend and the gold rally, although it has some short term upside, can't last very long."

The dollar index, which gauges the greenback against a basket of six major currencies, fell 0.3% to 95.891.

"There did not seem like many sell orders on the way up, which had been a feature of the past few days post nonfarm payrolls data, with all the interest focused on the buy side," MKS PAMP Group senior precious metals dealer Alex Thorndike said in a note.

The unexpected drop in U.S. productivity may confirm the U.S. Federal Reserve's fears that the economy may slip into a period of slow growth, reducing the central bank's willingness to raise interest rates.

Gold is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell for a second straight day on Tuesday. It slipped 0.12% to 972.62 tonnes from Monday. 

Spot silver > was up 2% at $20.26 an ounce.