January 24, 2018 / 5:30 AM / 7 months ago

PRECIOUS-Gold inches up on weaker dollar, trade war concerns

    * U.S. dollar touches fresh 3-year low
    * Spot gold biased to rise towards $1,357.54/oz -Technicals
    * Asian stocks up 5 pct-10 pct since start of year

 (Recasts lede and header, updates prices)
    By Nithin ThomasPrasad
    Jan 24 (Reuters) - Gold prices edged up on Wednesday,
drifting near a four-month high hit last week, as the U.S.
dollar sank to a fresh three-year low, while worries about
potential trade wars led to some risk-aversion trade as well.
    Spot gold        was up 0.1 percent at $1,342.30 per ounce
at 0715 GMT, while U.S. gold futures         for February
delivery rose 0.4 percent to $1,342.30 per ounce.
    "Gold could move higher as we are still in the early stages
of a broader USD sell-off, with all eyes focused on 110
USD-JPY," said Stephen Innes, APAC head of trading at OANDA.
    The dollar touched a four-month low against the yen on
simmering concerns that the U.S. currency's yield advantage will
start to erode as major central banks head toward unwinding
their massive stimulus.        
    Against the yen       , the dollar fell below the 110
threshold for the first time in four months.
    The dollar index        fell to its lowest since Dec. 31,
2014, on a fresh burst of speculative selling. 
    A weaker dollar makes bullion more attractive for holders of
other currencies.   
    "Global investors are also concerned about potential trade
wars... which is stirring up some risk-aversion trade, so that,
in turn, is supporting gold," said Richard Xu, a fund manager at
China's biggest gold exchange-traded fund, HuaAn Gold.
    On Tuesday, U.S. President Donald Trump imposed import
tariffs on washing machines and solar panels, putting a cloud
over global trade at a time when its revival has fuelled hopes
for a stronger world economy.             
    "I think gold prices will continue to trend higher along
with other commodities, so $1,400 (an ounce) is our near-term
target," Xu said. 
    Markets also expect an U.S. interest rate hike in March.
Gold is highly sensitive to rising U.S. interest rates, as these
increase the opportunity cost of holding non-yielding bullion 
while boosting the greenback.
    Meanwhile, recent strong gains in equities weighed on the
precious metal. Most Asian stock indexes are up anywhere from 5
to 10 percent since the start of the year with many at all-time
highs.            
    Spot gold is biased to break a resistance at $1,341 per
ounce and rise towards the Sept. 8, 2017 high of $1,357.54,
according to Reuters technical analyst Wang Tao.            
    In other precious metals, silver        was nearly flat at
$17.05 per ounce after touching a 3-1/2-week low of $16.73 in
the previous session.
    Platinum        fell 0.2 percent to $1,004.25 per ounce,
while palladium        0.1 percent to $1,093.15 per ounce.

 (Reporting by Nithin Prasad in Bengaluru; editing by Richard
Pullin and Subhranshu Sahu)
  
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