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Gold edges up as US dollar trades below 1-year highs

20th July 2018

By: Reuters

  

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BENGALURU – Gold prices edged up in volatile trade on Friday, after hitting a one-year low in the previous session, as the US dollar eased from its highest in a year.

Spot gold was trading at $1 224.55 an ounce at 0811 GMT. In the previous session, it fell to its weakest since July last year at $1 211.08 an ounce.

US gold futures were little changed at $1 224.40 an ounce.

"Geopolitical tensions such as trade war are supporting gold to some extent but investors are still not ready to hedge their bets fully . . . they think the current situation is only a hiccup and things will smooth out after that," said Naeem Aslam, ThinkMarkets.com chief market analyst.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.03% at 95.123, after US President Donald Trump expressed concern about the currency's strength and the Federal Reserve's interest rate increases.

Trump on Thursday criticized Fed's policy even though most economists believe the highest inflation in seven years and lowest unemployment in 40 years justify recent interest rate rises and a strong US dollar.

This comes after Fed Chairman Jerome Powell's two-day congressional testimony where he said the US was on course for years more of steady growth and reaffirmed expectations for more interest rate rises.

Rising US interest rates tend to boost the dollar and make gold more expensive for other holders.

Elsewhere, officials from the EU Trade Commission are due to arrive in Washington next week for trade talks but the bloc is preparing a list of US imports to hit if the United States imposes tariffs on EU cars.

Financial leaders of the world's 20 biggest economies meet in Buenos Aires this weekend for the first time since China and the United States put tariffs on $34 billion of each other's goods.

"It seems gold cannot really get anything going on the upside," said INTL FCStone analyst Edward Meir.

"Despite what the US President said, investors quickly concluded that his opinions do not count much when it comes to the Federal Reserve actions."

Spot gold may test a support at $1 204.45 per ounce, a break below which could cause a loss to the next support at $1 194, Reuters technical analyst Wang Tao said.

In other precious metals, silver rose 0.9% to $15.41 an ounce. It was down about 2.5% for the week so far.

Palladium gained over 2% at $889 an ounce. The metal was set to fall about 5% for the week.

Platinum was 0.9% higher at $811.80 per ounce.

Edited by Reuters

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