Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER
Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER

Bengaluru — Gold prices held firm on Thursday after hitting the highest in two weeks in the previous session, with improved risk appetite weighing on the dollar.

Spot gold was 0.1% higher at $1,227.11 an ounce at 3.44am GMT. Prices on Wednesday marked their strongest since November 7 at $1,230.07/oz.

US gold futures were down 0.2% at $1,226.10/oz.

“Weakness in the dollar has supported investor appetite in the gold space,” said ANZ analyst Daniel Hynes.

The dollar was broadly lower as demand for safe-haven currencies declined after a rebound in global equities, and as the euro strengthened on hope for a resolution of Italy’s budget dispute.

Meanwhile, Asian shares stepped ahead cautiously, though rising US interest rates and escalating trade tensions kept financial markets on edge amid signs of slackening global growth.

The dollar has been under pressure this week as cautious comments by Federal Reserve officials about a potential global slowdown raised doubts about the pace of interest rate hikes.

The doubts were heightened by data on Wednesday showing weekly jobless claims rose to a more than four-month high and new orders for US-made capital goods were unexpectedly flat in October.

“We are seeing some impact of the weaker than expected durable goods number, which has reinforced investors to question their expectations of rate hikes in 2019 and weaker dollar followed,” Hynes said.

A fourth rate hike for this year is expected next month and policymakers had earlier indicated two more by June 2019.

Prospects of higher US interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding bullion.

Gold has been holding up well amid a weaker dollar, geopolitical tensions like Brexit and the US-China trade war, and an unconvincing stock market, said Brian Lan, MD at Singapore dealer GoldSilver Central.

Spot gold may end its bounce around a resistance at $1,231 and then test a support at $1,211/oz, according to Reuters technical analyst Wang Tao.

Indicative of investor sentiment toward bullion, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.27% to 762.92 tons on Wednesday.

Among other precious metals, silver fell 0.4% to $14.44/oz.

Platinum was flat at $840.50.oz, while palladium was up 0.1% to $1,149.50.