GOLD FIRMS NEAR 2-WEEK HIGHS AS THE DOLLAR WEAKENS.

Gold firmed near two-week highs on Thursday as the dollar weakened on doubts about the pace of future U.S. interest rate hikes.

Spot gold was up 0.1 per cent at US$1,226.70 an ounce. Prices on Wednesday had peaked at US$1,230.07, the highest level since Nov. 7.

U.S. gold futures were flat at US$1,228 an ounce.

“What has given a leg-up for the gold markets is the prospect that the U.S. Federal Reserve might be bringing an end to its rate hiking cycle earlier than expected,” said Macquarie commodity strategist Matthew Turner.

The Fed is widely expected to impose its fourth rate hike of 2018 in December, but investors have concerns over how many rate hikes the central bank can implement next year without risking a slowdown in the domestic economy.

“The euro is slightly up against the dollar, the U.S. dollar index is down, so on the currencies side the precious metal gets some support,” a Germany-based analyst said, adding that a riskoff mode due to lower equities was also helping gold.

The dollar index measured against a basket of major currencies was down 0.2 per cent, while the euro briefly rallied after Britain and the European Union hinted at setting out their future relationship. A weaker dollar makes gold more affordable for holders of other currencies.

Europe’s share markets slipped in the session, while Chinese markets extended falls in Asia over concerns about a trade war between Beijing and the United States. Wall Street was closed for the U.S. Thanksgiving holiday.

Markets are focused on U.S. President Donald Trump’s meeting with his Chinese counterpart, Xi Jinping, at the G20 summit later this month.

“If the U.S. turns the screw further on imposing tariffs on the other half of Chinese exports to the United States, this will be a trigger for the stock markets and risky asset markets, and favourable for gold as a safe-haven,” a Germany-based analyst, who declined to be named, said in context of the G20 summit.

Investor interest in bullion was reflected in holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, which rose on Wednesday to their highest since the end of August at 762.92 tonnes.

“It shows a shift in the market perception that more investors regard gold as a necessary store of value,” said Commerzbank analyst Carsten Fritsch, adding that the “huge stock market correction” recently caught many investors on the wrong foot and prompted a shift back into gold.

Silver fell 0.2 per cent US$14.46 an ounce, hovering near two-week highs hit in the previous session.

Platinum rose 0.4 per cent to US$843.70, while palladium was also up 0.4 per cent at US$1,153 an ounce.