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Gold turns positive as dollar drops on possible Canada NAFTA concession

Reuters  |  NEW YORK/LONDON 

By and Shabalala

NEW YORK/LONDON (Reuters) - Gold turned positive on Wednesday as the U.S. dollar weakened against a basket of major currencies after hopes grew of concessions by that would resolve disputes over reworking the North American Free Trade Agreement.

Spot gold was up 0.8 percent at $1,206.94 per ounce by 1:37 p.m. EDT (1737 GMT), after hitting its lowest since Aug. 24 at $1,187.21 on Tuesday. U.S. gold futures for December delivery settled up $8.70, or 0.7 percent, at $1,210.90 per ounce.

The U.S. dollar index faded against a basket of major currencies as emerged that was ready to offer the limited access to the Canadian dairy market as a concession in negotiations to rework the North American Free Trade Agreement.

"The dollar is significantly weaker against major currencies today and commodities are supported across the board. Any type of resolution in the agreement is going to support those currencies," said David Meger, trading at High Ridge Futures.

A trade conflict between and had earlier prompted investors to buy the U.S. dollar in the belief that the has less to lose from the dispute.

Gold has lost out to the dollar in a battle for safe-haven flows. A firmer dollar makes gold more expensive for holders of other currencies.

The dollar index touched a three-week high of 95.74 last week.

In addition, a sell-off in the Chinese yuan made the more expensive for buyers from the world's top consumer of the

But Wednesday's reversal in the greenback made gold less expensive for holders of other currencies.

Meanwhile, is widely expected to raise benchmark interest rates at its September meeting and expectations are growing for one more hike in December on positive economic data.

Higher rates increase bond yields, making non-yielding bullion less attractive, and tend to boost the dollar, in which gold is priced.

Central meetings in and this week are also on investors' radar, with a particular market focus on whether will step in to fight inflation and a depreciating currency, said.

Gold has fallen more than 10 percent from a peak in April, under pressure from rising U.S. interest rates amid intensifying global trade tensions.

Spot silver increased 0.9 percent at $14.21 per ounce, having touched $13.90 in the previous session, its lowest since January 2016.

gained 1.5 percent at $799 per ounce, while palladium was up 0.2 percent at $976.30 an ounce.

(Additional reporting by in Bengaluru; Editing by and Chizu Nomiyama)

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

First Published: Wed, September 12 2018. 23:33 IST