Gold claws higher on soft dollar, renewed trade tensions

Key Points
  • Gold prices edged higher for a second day on Thursday.
  • The dollar extended losses after minutes of the latest Federal Reserve meeting hinted at a dovish approach to interest rate hikes.
Source: World Gold Council

Gold prices rose for a second session on Thursday, lifted by a weaker dollar, worries about renewed trade tensions and volatile emerging markets.

Spot gold was up 0.46 percent at $1,298.93 per ounce at 8:42 a.m. ET. U.S. gold futures for June delivery added 0.68 percent to $1,298.40 per ounce.

Gold's safe-haven appeal was burnished after the U.S. launched a national security investigation into car and truck imports that could lead to new tariffs similar to those it imposed on steel and aluminum in March.

"We have a whole host of potential sources of support for gold. Trade spats are reoccurring and there's a focus on troubled emerging markets," Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said.

Turkey has been in the spotlight and the lira weakened more than 2 percent after a huge emergency interest rate hike failed to stem its problems. "The relief rally in the Turkish lira yesterday seems to have only managed to pause the slide but not reverse it," Hansen said.

Gold is often seen as a safe investment during times of political and financial uncertainty.

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Gold also was buoyed from a weaker dollar index, which lost momentum after U.S. President Donald Trump's threat to impose new tariffs and minutes of the Federal Reserve's last policy meeting were seen as dovish.

Higher U.S. rates tend to boost the dollar and drag on greenback-denominated gold, but the metal can also be used as a hedge against rising inflation.

Hansen said it was worrying that the positive drivers for gold had not pushed it further towards key levels of $1,300 and $1,305, which need to be broken to resume the upside. "If we get there that's going to force a reaction from funds, but we need a spark and so far gold hasn't managed to break out of its range."

Spot gold has shed 5 percent since touching $1,365.23 on April 11, the highest in nearly three months.

Among other precious metals, silver gained 0.8 percent to $16.55 an ounce, platinum climbed 0.9 percent to $907.70 an ounce and palladium shed 0.4 percent to 972.97 an ounce.

Analysts at Standard Chartered on Wednesday said they expected platinum to continue to trade at a discount to both palladium and gold this year.