December 21, 2018 / 1:45 AM / a month ago

PRECIOUS-Gold holds ground near 6-month high, weak dollar supports

Dec 21 (Reuters) - Gold prices held firm on Friday, having climbed to a near six-month high in the previous session, as investors shunned risky assets and the dollar lingered near one-month lows.

FUNDAMENTALS

* Spot gold was steady at $1,260.16 per ounce at 0125 GMT, as of 0043 GMT, after jumping over 1 percent in the previous session. The precious metal hit a high of $1,266.4 on Thursday, a level last touched on June 26.

* U.S. gold futures declined 0.3 percent to $1,263.7 per ounce.

* The dollar fell to a more than three-month low against the yen on Thursday, after the Federal Reserve signalled fewer interest rate hikes over the next two years and expressed caution about the U.S. economic outlook.

* The dollar index, which measures the greenback against a basket of six major currencies, was near a one-month low against its peers.

* U.S. Federal Reserve Chairman Jerome Powell on Wednesday signalled more interest rate hikes over the next couple of years, but traders of U.S. interest rate futures are not buying it. In fact, they now expect a rate cut in 2020.

* Global stocks were sailing into Christmas on a sea of red as the threat of a U.S. government shutdown and of further hikes in U.S. borrowing costs inflamed investor unease over the economic outlook.

* The number of Americans filing applications for jobless benefits rose marginally from near a 49-year low last week, suggesting underlying strength in the labour market and broader economy.

* The gap between two- and 10-year yields shrank to just 9 basis points at one stage, the kind of flattening that has heralded recessions in the past.

* U.S. President Donald Trump on Thursday said border security must be part of legislation to fund the U.S. government, a position that raises the threat of a partial federal shutdown on Saturday.

* The Bank of England said on Thursday that Brexit uncertainty had “intensified considerably” over the last month, and trimmed their forecast for quarterly economic growth in the last three months of 2018.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.34 percent to 769.14 tonnes on Thursday.

* In a sign of demand for precious metals, sales of U.S. Mint American Eagle gold and silver coins are closing out their weakest year since 2007, as investors favoured higher-yielding assets, despite volatility in global stock and bond markets late in the year. (Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Subhranshu Sahu)

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