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Gold prices edged higher on Tuesday as investors resorted to bargain-hunting after the precious metal fell to over one-month lows, weighed down by a stronger dollar.
Spot gold was up 0.3 per cent at $1,204.22 per ounce at 0339 GMT, having touched its lowest since October 11 at $1,199.72 earlier in the session. US gold futures inched up 0.1 per cent to $1,204.7 per ounce.
“It's been some time that we have seen this level, so we are seeing some buying here,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. “However, a stronger dollar has capped the market.”
The dollar index, which measures the greenback against a basket of six major currencies, was sitting just shy of its 16-month high of 97.69 hit on Monday, benefiting from save-haven flows as investors shunned riskier assets because of political uncertainties in Europe, fears of a global economic slowdown and US-Sino trade tensions.
A firmer greenback makes bullion expensive for the holders of other currencies as the commodity is priced in dollars. Gold, usually viewed as a safe store of value during political and economic uncertainty, has fallen over 12 per cent from its April peak as investors largely turned to the dollar as the US-China trade war unfolded against a background of higher US interest rates.
Spot gold may bounce moderately to $1,211 per ounce before breaking a support at $1,202 and falling more to $1,192, said Reuters technical analyst Wang Tao.
Meanwhile, Asian shares skidded on Tuesday after a rout in tech stocks pulled down Wall Street. Gold will remain an important portfolio diversifier amid rising volatility, ANZ analysts said in a note.
“We see the recovering ETF holdings and the risk-off tone of the equity market boding well for gold prices.”
Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.90 per cent to 762.00 tonnes on Monday. Among other precious metals, silver was up nearly 1 per cent at $14.09 per ounce, having touched a more-than-two-month low of $13.95 earlier in the session. Palladium climbed 1.16 per cent to $1,108.20 per ounce. Platinum rose 0.6 per cent to $845.80 an ounce.
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