Picture: BLOOMBERG
Picture: BLOOMBERG

London — Gold prices recovered on Friday from six-month lows as speculators took profits amid a weaker dollar, but some analysts warned that more losses were likely.

Spot gold added 0.2% to $1,250.53 an ounce by 9.30am GMT. On Thursday, it touched $1,245.32, its lowest since December 13 2017. US gold futures edged up 0.1% to $1,251.80 an ounce.

"We’re receiving only a couple of dollars bounce on the back of a pretty decent weakening of the dollar, so gold’s not showing any signs of strength," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. "The shorts are still in control and the momentum is negative. The dollar and US treasuries have taken over the role of safe haven this month and as long as the trade war is creating uncertainty then that will probably prevail."

Gold was on track for a third straight weekly decline, having slipped 1.4% so far this week. Spot gold was down about 3.6% for the month, heading for its biggest monthly drop since November 2016.

The euro jumped more than half a cent after EU leaders reached an agreement on migration. A stronger euro potentially boosts demand for gold by making dollar-priced bullion cheaper for European investors.

The dollar index against a basket of six major currencies slipped 0.6%, having risen to about a one-year high on Thursday. "There is feeling in some quarters that we may be nearing the bottom of this recent downturn [in gold]," MKS PAMP Group trader Tim Brown wrote in a note.

Support-wise, gold appears fairly well-bid at about $1,245 to $1,248 and there should be support at $1,237 and below that, Brown said. Hansen said the downtrend would likely accelerate unless gold held above multiple layers of support slightly below $1,240. "If that area breaks, the shorts and momentum sellers will have a field day."

In other precious metals, spot silver gained 0.7% to $16.07 an ounce. It was heading for its biggest weekly decline since the week ended April 27, down 2% for the week.

Palladium dipped 0.2% to $947.20 an ounce. Platinum was up 0.3% at $845.790 an ounce. It hit its lowest since January 2016 at $837.30 earlier in the session. It was down 9% for the quarter, its worst since the quarter that ended in December 2016.

Reuters