Gold rose to a one-week high on Tuesday, helped by a weaker U.S. dollar and a fall in global stocks, but moves were limited as investors sought clarity on the path of U.S. interest rates.
Spot gold was up 0.1 percent at $1,247.10 per ounce at 9:54 a.m. ET on the 18th, having earlier touched its highest since Dec. 10 at $1,249.75.
U.S. gold futures were flat at $1,251.50 per ounce.
“Today’s strength in gold is mainly due to a weaker dollar,” ABN AMRO analyst Georgette Boele said. “The Fed is probably going to signal one rate hike less next year, that could pressure the dollar further.”
The Fed is widely expected to raise interest rates for the fourth time this year at its two-day policy meeting ending on Wednesday. But weak stock markets and slowing global growth may prompt the central bank to signal a slowdown in rate increases next year.
“Gold is finding support from weak stock markets around the world, which express the high risk aversion among market participants,” Commerzbank analysts said in a note.
“The fact that bond yields have fallen again recently is likewise helping.”
World stock markets tumbled as fears about a slowing global economy gripped investors, while the dollar index slipped 0.15 percent against a basket of major currencies.
In euro terms, gold reached its highest since June at 1,100.57 euro an ounce.
“While the budget dispute tensions between the European Union and Italy are easing … France now appears to be becoming a worry,” Commerzbank said.
France’s budget deficit is likely to overshoot the European Union’s limit of 3 percent of GDP next year, Prime Minister Edouard Philippe told Les Echos newspaper in an interview earlier this week.
Gold, considered a safe investment during times of financial, economic and geopolitical uncertainty, has risen more than 7 percent from 19-month lows hit in mid-August. It is also set to post its best quarter since March 2017.
“We feel there is still upside potential from here, particularly if stocks and the dollar remain under pressure,” traders at MKS PAMP said in a note.
Among other precious metals, silver fell .1 percent to $14.65, while platinum slipped 1.04 percent to $785.25 per ounce.
Spot palladium fell 0.47 percent to $1,252.30 per ounce, after touching a record high of $1,269.5 on Monday.