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Gold scales over three-week peak as dollar slips

Reuters  |  BENGALURU 

By Eileen Soreng

BENGALURU (Reuters) - Gold prices hit a more than three-week high on Monday on a weaker dollar, as a trade ceasefire between the and revived investor demand for riskier assets.

and agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days.

Spot gold climbed about 0.7 percent to $1,230.78 per ounce at 0725 GMT, having touched its highest level since Nov. 7 at $1,231.34 earlier in the session.

U.S. gold futures were up 0.8 percent at $1,235.2 per ounce.

"Dollar has edged down from its high, supporting gold," said Hareesh V, at Geojit Financial Services, adding that the market would keep a close watch on what the U.S. and intend to do during and after the 90-day ceasefire period.

The dollar index, which measures the greenback against a basket of six major currencies, was down about 0.5 percent.

The U.S. currency has been the preferred safe haven this year as the U.S.-trade war unfolded against a backdrop of higher U.S. interest rates, denting the bullion's appeal.

However, the greenback came under pressure last week after Federal Reserve said interest rates are just below neutral, raising expectations that is closer to the end of its rate hike cycle.

"The over pessimism in bullion space on account of interest rate moving up is overdone and this is the right time to accumulate gold," said Kunal Shah, at Commodities in Mumbai, India, adding, "by December 31 we can see COMEX gold at $1,250."

Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on U.S. yields and the dollar, in which gold is priced.

If the Fed is worried about growth and makes it known more clearly, then the market could possibly see a further boost to gold, said John Sharma, an with National Australia (NAB).

Powell is scheduled to testify before a congressional later this week.

Analysts see the supported in the near-term on political and economic risks such as uncertainties over Brexit and Italy's budget, and the recent unrest in

Among other precious metals, palladium gained nearly 1 percent to $1,188.49 per ounce, after having crossed the $1,200 mark for the first time on Friday.

Spot silver climbed 1.6 percent to $14.40 per ounce, while platinum rose nearly 2 percent to $812.10 per ounce.

Speculators increased their net short position in gold by 8,464 contracts to 51,828 contracts in the week to Nov. 27, the (CFTC) said on Friday.

(Reporting by Eileen in Bengaluru; Editing by and Subhranshu Sahu)

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

First Published: Mon, December 03 2018. 13:18 IST
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