· The price of gold rose slightly on Thursday, lifted off an early six-month low as the U.S. dollar fell from an 11-month high, with traders saying they heard Russia had bid for bullion.
· Spot gold was up 0.2 percent at $1,265.4 an ounce at 1501 GMT but off a low of $1,260.84, its weakest level since Dec. 19. U.S. gold futures for August delivery settled down $4, or 0.3 percent, at $1,270.50 per ounce.
· "Gold started to pick up as the dollar weakened," said RJO Futures' Dan Pavilonis.
· The dollar fell off an 11-month high against a basket of major currencies as the Philadelphia Federal Reserve's gauge of U.S. Mid-Atlantic business activity fell to a near 1-1/2 year low, spurring profit-taking on the greenback.
· Higher U.S. interest rates and the prospect of further rate hikes this year from the Federal Reserve have boosted the dollar to its highest since last July against a basket of majorcurrencies.
Higher interest rates would encourage investors to sell gold, which earns nothing and costs money to store and insure.
A rising U.S. currency also sends a sell gold signal to funds that use numerical models because a strong dollar makes commodities more expensive for holders of other currencies.
· Even so, traders said they have seen gold purchases come from Russia.
· "We’ve been hearing in the news over the last couple weeks that Russia has been buying more gold and selling U.S. Treasuries," Pavilonis added.
· Russia could be attempting to shore up its currency because of falling crude oil prices, said George Gero, vice president of RBC Capital Markets.
"And also, they are a large producer of gold and they may be trying to stabilize the market," Gero added.
· "Uncertainty would normally fuel demand for gold as a safe haven, which we would see in the physically backed products, but instead we are seeing outflows from the U.S. products," saidJulius Baer analyst Carsten Menke.
"From the perspective of a U.S. investor, focused on the domestic market and economy, the threat from trade tensions is much lower than in Europe. U.S. domestic consumption is a major driver of growth and there isn't a problem there."
· Silver gained 0.4 percent at $16.33 an ounce, earlier falling to $16.16, its lowest since May 2.
· Palladium lost 1.5 percent at $950, earlier sinking to $948.50, a seven-week low. Platinum slipped 0.1 percent at $866.10 per ounce .
Reference: Reuters
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