* Spot gold could test resistance at $1,237/oz -technicals
* Dollar index drops to six-week low
* SPDR gold holdings down 0.35 pct on Friday
By Maytaal Angel
LONDON, March 20 Gold prices scaled a two-week
peak on Monday as the dollar slid to a six-week low after a G20
weekend summit dominated by the U.S. administration's
protectionist stance on global trade.
The precious metal has been rising since Wednesday, when the
dollar dropped after the U.S. Federal Reserve raised interest
rates but stopped short of predicting a sharper acceleration in
monetary tightening over the next two years.
Gold is sensitive to falling interest rates, which reduces
the opportunity cost of holding non-yielding bullion.
"Overall the geopolitical outlook still points to several
hotspots ... and we're not going to see a focus on rate rises
for the foreseeable future now, because that's out the way. Over
the next few weeks one has to favour the upside," said Ole
Hansen, head of commodity strategy at Saxo Bank.
Spot gold rose 0.3 percent to $1,231.45 an ounce by
1450 GMT, after touching $1,235.50, its highest since March 6.
U.S. gold futures gained 0.1 percent to $1,231.80.
Breaking a decade-long tradition of endorsing open trade,
G20 finance ministers and central bankers made only a token
reference to trade at the weekend, acquiescing to an
increasingly protectionist United States.
Global equities baulked at the move, and the souring risk
appetite drove investors into safe haven gold.
The precious metal has rebounded more than $35 from the low
hit before the Fed policy announcement last Wednesday, while the
dollar has fallen 1.7 percent.
"The dovish outlook ... following last Wednesday’s Fed
meeting is clearly still having an impact. This is likely to
lure a number of speculative financial investors back into gold
after this group massively reduced their net long positions in
the run-up to the meeting," Commerzbank said.
Money managers reduced their net long, or buy, positions in
gold by 44,058 lots to 49,835 lots during the week to March 14,
the lowest since early January.
Spot gold is expected to test resistance at $1,237, a break
above which could lead to gains to $1,243, Reuters technical
analyst Wang Tao said.
Denting the bullish gold narrative, holdings of SPDR Gold
, the world's largest gold-backed exchange-traded fund,
fell 0.35 percent to 834.10 tonnes on Friday.
Spot silver rose 0.4 percent to $17.41 an ounce,
while platinum was up 0.8 percent at $965.50 and
palladium firmed by 0.5 percent to $776.50.
(Additional reporting by Nallur Sethuraman; Editing by David
Goodman and Edmund Blair)