Gold nudges higher

BENGALURU. — Gold firmed yesterday on expectations of fewer interest rate rises in the United States which partially offset the impact of a firmer dollar and a rally in stock markets on hopes of a thaw in US-China trade relations.

Spot gold was up 0,1 percent at $1,243.55 per ounce at 1218 GMT. US gold futures rose 0,1 percent to $1,248.60 per ounce.

“The fact that we are seeing some risk coming back to the market: the stocks are climbing, the dollar is up and the yen is weaker, does remove some of the demand in gold. But overall, it’s holding relatively well but is missing a spark to move higher,” Saxo Bank analyst Ole Hansen said.

The dollar climbed for a third consecutive day as US Treasury yields rose ahead of a Federal Open Market Committee (FOMC) meeting next week, while stock markets rallied as US President Donald trump sounded upbeat about a trade deal with China.

“Next week’s FOMC meeting is going to be the last major economic event of the year. The (gold) market has started to price in the ‘one and done’ interest rate scenario, and has responded quite positively to that,” Hansen said.

Fed policymakers are widely expected to raise interest rates at their December 18-19 meeting, but the market focus is on how many rate increases will follow in 2019. Expectations of fewer interest rate rises is positive for gold as lower interest rates reduce the opportunity cost of holding non-yielding bullion.