Gold edges up as global stocks sag, US dollar slips

BENGALURU — Gold prices edged higher on Wednesday as some investors sought refuge in the precious metal after the global stocks tumbled and the US dollar weakened.

Spot gold rose 0.4% to $1,194.12 per ounce by 4:52 p.m. EDT (2052 GMT). US gold futures settled up $1.9, or 0.16%, at $1,193.4.

Stocks on major world markets fell to a three-month low, with the benchmark S&P500 stock index falling more than 3%, in its biggest one-day fall since February. The US dollar index retreated from a seven-week peak hit in the previous session.

“The S&P500 is looking very weak and negative and that is putting fear into investors,” said Michael Matousek, head trader at US Global Investors.

Gold, however, has fallen over 13% since hitting a peak in April, with investors increasingly opting for the safety of the greenback as the US-China trade war unfolded against a backdrop of rising US interest rates.

Rising bond yields have also dampened the appeal of gold, which pays no interest. Higher US Treasury yields can translate into more demand for the dollar, making bullion more expensive for holders of other currencies.

US Treasury yields held near multi-year highs after government data showed the US producer price index (PPI) climbed in September, which reinforced expectations that the Federal Reserve would continuing raising interest rates.

The Fed increased interest rates last month for the third time this year and is widely expected to hike again in December, with no suggestion its tightening policy will cease anytime soon.

Analysts said an upside in gold could also be limited by waning demand due to depreciating domestic currencies in major gold-consuming countries such as India.

Spot silver lost half a% at $14.29, earlier touching its lowest since Sept. 28 at $14.21.

Palladium fell 0.5% to $1,064.22 and platinum slipped 0.2% to $822.20 an ounce. —