Money News

Gold rises to near two-month high on thin holiday trade

(Reuters) - Gold prices rose to a near-two month high on Thursday, holding firm above the key $1,500 level, as investors braced for a robust equity rally to run out of steam, while volumes remained low on holiday trade.

FILE PHOTO: Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File photo

Spot gold rose 0.8% to $1,510.74 per ounce as of 10:43 a.m. ET (1534 GMT). Prices notched $1,512.30 an ounce, their highest since Nov. 4 earlier. U.S. gold futures rose 0.6% to $1,515.70 per ounce.

“$1,500 is a strong psychological up-point. Once we saw that breakout, we are moving past that first point of resistance at $1,512. This could be the break we were looking for as we run up to $1,600,” said Alex Turro, market strategist at RJO Futures.

“Gold is going to be supported moving forward through central bank buying, enhanced demand, strong technicals and support in the market.”

The metal has gained about 18% so far this year and is on track for its best year since 2010, due mainly to the protracted U.S.-China trade dispute and its impact on the global economy.

Beijing said on Wednesday it is in close touch with Washington on a trade deal signing ceremony, a day after U.S. President Donald Trump said that he and Chinese President Xi Jinping will have a ceremony to sign the recently struck trade deal.

Hopes of a breakthrough in the trade war, combined with recent positive domestic data, have powered U.S. stock markets to record highs in the past few weeks and set the S&P 500 on course for its best year since 2013.

“As portfolio managers rebalance equity portfolios and take profits off the table, they reinvest those funds into other asset classes, and gold is a beneficiary of that,” said David Meger, director of metals trading at High Ridge Futures.

“The Fed leaving rates at an accommodative stance, along with the liquidity offered by the repo rate” has also provided support to bullion, he added.

U.S. Federal Reserve officials voted unanimously to leave interest rates unchanged earlier this month, and have signaled the central bank would require a material change to outlook to either raise or lower borrowing costs.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.

Amongst other precious metals, silver rose past $18 an ounce, up 1.3%, and reached its highest since Nov. 5. Platinum rose to $958.92 in the session, its highest since Sept. 24.

Meanwhile, palladium inched 0.6% higher to $1, ounce.

Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Steve Orlofsky