· Gold rose to a one-week high on Thursday amid a weaker dollar, on increased demand from Chinese retail investors and as the market waited for the announcement of a new chair of the US Federal Reserve, expected later in the day.
Spot gold was up 0.3 per cent at $1,278.10 per ounce at 0617 GMT, after earlier rising to $1,281.43, the highest since Oct. 26.
US gold futures edged up 0.1 per cent to $1,278.80 per ounce.
· "The return of Chinese investor interest in gold at these levels is a welcome vote of confidence for long-suffering gold bulls," said Jeffrey Halley, a senior market analyst with OANDA.
Higher demand from Chinese retail buyers has raised domestic bullion prices and global prices have risen to narrow the gap, he said.
· US President Donald Trump is expected on Thursday to nominate Jerome Powell as the next head of the Fed, putting his own stamp on the leadership of the US
· "A lot of the focus is on the Fed chair, and Trump's expected nomination of Jerome Powell," said OCBC analyst Barnabas Gan.
"The current movement in prices is not really about him (Powell) being hawkish or dovish, but more so about market uncertainty about what his nomination would mean."
· The dollar pulled back from a 3-1/2-month high versus the yen and also fell against the euro, sagging ahead of a US tax bill that will be unveiled after a one-day delay.
The dollar pulled back from a 3-1/2-month high versus the yen and also fell against the euro, sagging ahead of a US tax bill that will be unveiled after a one-day delay.
· "Right now, we see prices supported above $1,270 until perhaps a week from now. But beyond that, when the Fed meets in December, we expect one more rate hike," OCBC's Gan said.
"On that note, we are still bearish on gold and expect prices to touch $1,250 at year-end, underpinned by the rate hike."
· Gold is highly sensitive to rising US interest rates, as these lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
Reference: Reuters
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