Thursday, 11 October 2018

Gold prices edge higher as global stocks sag, U.S. dollar slips

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

Spot gold rose 0.4 percent to $1,194.12 per ounce by 4:52 p.m. EDT (2052 GMT). U.S. gold futures settled up $1.9, or 0.16 percent, 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 percent, in its biggest one-day fall since February. The U.S. 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 U.S. Global Investors.

"With the markets going down people are increasing their allocation towards gold."

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

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

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