Gold off six-and-a-half month peak on equity rebound, stronger dollar

Gold prices inched down from their highest level in over six months on Wednesday after a rebound in equity markets and a stronger dollar dented the precious metal's appeal.

Spot gold was down 0.1 percent at $1,280.81 an ounce at 3:20 p.m. EST (2020 GMT), having earlier touched its highest since June 15 at $1,288.66.

U.S. gold futures settled up 0.2 percent at $1,284.10 per ounce.

"The equity markets turned around. Secondly, the dollar index got very strong; it is testing the 97 level again. Both of these factors are putting pressure on the price of gold," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.

"I think gold will have a very good 2019. The dollar will continue to weaken. Even though it's up today, it is just an aberration."

The U.S. benchmark S&P 500 stock index was trading lower but was above the day's trough after dropping as much as 1 percent earlier in the session.

The dollar index rose 0.7 percent against the euro and sterling on Wednesday.

Meanwhile, euro zone manufacturing activity barely expanded at the end of 2018 in a broad-based slowdown, while China's factory activity also contracted for the first time in 19 months in December.

Gold priced in euros jumped to 1,134.08 euros an ounce, its highest level since mid-June 2017. In sterling terms, gold climbed to its highest level since early September 2017, at 1,022.80 pounds an ounce.

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