New Delhi: Gold prices inched lower on Wednesday as the dollar firmed but hovered near a six-month high, supported by political instability in the United States and concerns about a global economic slowdown.
Spot gold climbed 0.4 percent to $1,273.77 per ounce as at 0820 GMT. It hit $1,274.68 in early trade, its highest since June 20. US gold futures were up 0.4 percent at $1,276.5 per ounce.
Investors are uneasy about global economic growth and are seeking gold as a safe haven, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank, adding the sharp sell-off in stock markets has also lent support.
“We always see good demand for gold in the year-end. I would not be surprised if we see gold surpass $1,300 in the near future.”
Asian equities were shaky following a Christmas Eve US stocks plunge. Wall Street has dropped sharply in recent weeks on concerns over weaker economic growth, compounded by political instability in the United States after a partial government shutdown.
The US Senate has been unable to break an impasse over President Donald Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3.
Tensions between the White House and the US Federal Reserve over monetary policy tightening also weighed on sentiment in the wider markets. Trump largely laid the blame for economic headwinds on the Fed, openly criticizing its chairman, Jerome Powell, whom he appointed.
“The latest move on gold should be a stark reminder to investors that gold in any form should be an essential part of any long-term investment strategy as again the yellow metal has proven its weight when markets turn turbulent,” Stephen Innes, APAC trading head at OANDA in Singapore, said in a note. Among other metals, silver gained 1 percent to $14.88 per ounce, while platinum was up 1.4 percent to $793.10.