MTS Help Center

Gold prices rose slightly on Monday as the U.S. dollar pared gains and bargain hunters used dips to accumulate the precious metal.

Spot gold rose as much as 0.5 percent to $1,256.11, and was up 0.4 percent at $1,254.60 an ounce at 0729 GMT. The yellow metal fell nearly 0.6 percent on Friday to a low of $1,247.01, its lowest since Oct. 7.

"Because the possibility of a December rate hike is increasing, generally, the trend of gold price is downwards but in the short term we think that there could be relatively a mild technical correction," said Jiang Shu, chief analyst at Shandong Gold Group. Shu expects prices to touch $1,270 in the short term before a sharp selloff on expectations of a rate hike. "There's still a period of time before the rate hike."

In the week ahead, market players will be focusing on the outcome of Thursday’s European Central Bank meeting for fresh clues on the future path of the region's massive stimulus program. Elsewhere, China is to release what will be closely watched third-quarter growth data amid ongoing concerns over the health of the world's second biggest economy. U.S. inflation data will also be in the spotlight, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs before the end of the year

Prices are likely to go as high as $1,350 an ounce sometime next year, after dipping below $1,200 as the Federal Reserve raises interest rates, likely in December, according to Bart Melek, the bank’s head of commodity research. Futures closed Friday at $1,255.50 an ounce on the Comex in New York.

Gold rallied 25 percent in the first half of the year, partly on the Fed’s inaction in raising U.S. borrowing costs, along with uncertainty following the U.K.’s vote to leave the European Union.

While prices have dipped, investor demand remains resilient. Holdings in gold-backed exchange traded funds as of Oct. 13 rose to 2,050.3 metric tons, the highest level since June 2013, according to data compiled by Bloomberg.

HSBC and MKS (Switzerland) S.A. report that China remains a noted gold buyer. "A healthy premium of local China gold prices to world price is encouraging physical purchases and is evidence of good demand," HSBC says. MKS reports that in early Shanghai trade on Friday, gold had $3.50 premium against loco London gold. Chinese interest supported gold early in the Asian session, before the metal ran into headwinds from a stronger U.S. dollar, MKS says.

Reference: Reuters, Investing,Bloomberg,Kitco