Mubasher: Gold prices rose on Friday as the dollar weakened on expectations that the Federal Reserve may place brakes on its monetary tightening cycle, if the US economy slows down this year.
This came as investors anticipated the outcome of the trade talks between the US and China.
By 9:09 am GMT, US gold futures climbed 0.47% to $1,293.40 per ounce, while spot gold rose 0.45% to $1,292.44 per ounce.
Amid concerns of economic slowdown in the US through the end of the new year and into 2020, “the weaker dollar and a more dovish Fed are the two most alluring factors for gold,” OANDA’s Asia Pacific trading head Stephen Innes told Thomson Reuters.
However, “the market is holding back a little as they are concerned the equity market could rally significantly on trade war truce,” Innes said.
At 8:56 am GMT, the US dollar index, which traces the currency against a basket of six major peers, dipped 0.20% to 95.3440.
The greenback on Thursday recovered from three-month lows after Fed Chairman Jerome Powell hinted that the central bank is not finished with its tightening monetary policy.
The dollar eased also on a partial US government shutdown entering its 20th day, while President Donald Trump on Thursday to exercise emergency powers to bybass Congress to fund a wall on the borders with Mexico.
“Once trade issues are resolved, the dollar is likely to remain suppressed, losing its appeal as a safe haven, [while] gold on the other hand would benefit,” Religare Broking metals, energy and currency research vice president Sugandha Sachdeva told Reuters.
Moreover, concerns about weaker global economic growth, further buttressed by disappointing data from Switzerland and France on Thursday.