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Gold inched up on Thursday, supported by physical buying and as the dollar remained under pressure, but a weaker yuan amid worries of looming US tariffs on China capped the metal's gains.
Spot gold was up 0.1 per cent at $1,197.38 at 0649 GMT, after rising 0.5 per cent in the previous session.
US gold futures rose 0.1 per cent at $1,202 an ounce.
“A bit of weakness in the US dollar has stabilised some of the selling (in gold) we saw earlier in the week,” ANZ analyst Daniel Hynes said.
“That was also supported by relatively positive signs of physical demand, in particular in India. That seems to have also boosted sentiment a little,” Hynes said, adding that a further weakness in the greenback should help gold sustain the momentum.
India gold imports
Gold has tumbled more than 12 per cent from a peak of $1,365.23 in April. Present levels have recently invoked a lot of physical buying in not just active gold buying countries like India and China, but in southeast Asia for investment purposes too, traders and analysts said.
India's gold imports more than doubled in August to hit their highest level in 15 months as lower prices prompted manufacturers to replenish inventory.
China's yuan weakened against the dollar on Thursday as investors braced for more sweeping tariffs expected soon from Washington, making gold expensive for buyers in the world's biggest consumer, traders said.
Gold has been under pressure for most of this year on rising interest rates, global trade tensions and an emergency market currency crisis, with investors parking their money in the dollar, undermining the metal's safe-haven status.
The dollar index against a basket of six major currencies stood at 95.121, down 0.1 per cent after shedding nearly 0.3 per cent overnight.
Payrolls data
Markets will be closely watching a US employment report due on Friday for clues on the pace of interest rate increases by the Federal Reserve.
“This week's non-farm payrolls data could strengthen the dollar further and push gold down. But it is likely to take support near $1,140,” said Hareesh V, head of commodity research, Geojit Financial Services.
Technical indicators showed the metal was likely to move in a range of $1,160 and $1,238 over the next four weeks, according to Reuters technical analyst Wang Tao.
Among other precious metals, spot silver was up 0.1 per cent at $14.17. The metal hit an over 2-1/2 year low at $13.97 early this week.
Platinum was flat at $783, while palladium rose 0.1 per cent to $973.50.
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