Gold prices rose on Thursday as growing expectations that the U.S. Federal Reserve will pause its rate tightening cycle this year and an impasse between U.S. President Donald Trump and Democrats on funding for a border wall weighed on the dollar.

Spot gold was up 0.2 per cent at $1,295.85 per ounce as of 0436 GMT, hovering near Friday's peak of $1,298.42 - a level last seen in mid-June. U.S. gold futures gained 0.4 per cent to $1,297.2 per ounce.

Minutes from the Fed's Dec. 18-19 policy meeting showed that several policy makers said they could be patient about future interest rate hikes and a few did not support the central bank's rate increase that month. “Gold is getting a bit of support out of a dovish Fed and institutional instability in the United States,” said Kyle Rodda, a market analyst at IG, Australia.

“We have got the markets pricing in the possibility of a Fed rate cut rather than a hike in the year ahead,” Rodda said, adding that the Fed minutes gave the dollar a bit of a “kick down” and there were chances for gold prices to break the $1,300 level with the present sentiment.

Gold prices are highly sensitive to declining interest rates which decrease the opportunity cost of holding the non-yielding bullion while pressuring the dollar. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.33 percent to 799.18 tonnes on Wednesday.

Silver was flat at $15.75 per ounce, while platinum inched up 0.1 per cent to $825.60.

Related Topics
comment COMMENT NOW