Gold prices rise as dollar slips to weakest since mid-June

The dollar index, which measures the greenback against a basket of six major currencies, slipped to a 3-1/2-week low after U.S. jobs data showed slower-than-expected wage growth.

Gold prices rise as dollar slips to weakest since mid-June

BENGALURU: Gold prices rose on Monday as investors covered their short positions and the dollar slipped to its weakest since mid-June, while lingering U.S.-Sino trade tensions supported the bullion as well. Spot gold was 0.4 percent higher at $1,258.61 an ounce, as of 0351 GMT, while U.S. gold futures for August delivery were up 0.3 percent at $1,259.90 an ounce.

Gold is pushing higher on the dollar`s weakness in early Asian trading, MKS PAMP Group trader Tim Brown wrote in a note.

The dollar index, which measures the greenback against a basket of six major currencies, slipped to a 3-1/2-week low after U.S. jobs data showed slower-than-expected wage growth.

The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year.

A weak U.S. dollar makes greenback-denominated gold cheaper for holders of other currencies. "Some short-covering has likely ensued given certainties over the U.S.-Sino trade tensions on Friday. Still, the uptick in risk appetite into the week may be short-lived if more trade tariff threats are seen into the week ahead," said OCBC analyst Barnabas Gan.

The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others` goods and giving no sign of willingness to start talks aimed at a reaching a truce. 

President Donald Trump said on Thursday the United States may ultimately impose tariffs on more than a half-trillion dollars` worth of Chinese goods. "With the ongoing U.S.-Sino trade tensions, the resignation of David Davis will likely be a side-show, though it may raise some concerns amongst market-watchers depending on how the overall Brexit issue progresses," OCBC`s Gan added.

Brexit Secretary Davis resigned because he was not willing to be "a reluctant conscript" to Prime Minister Theresa May`s plans to leave the European Union, delivering a blow to a British leader struggling to end divisions among her ministers.

Spot gold may rise into a range of $1,268-$1,277 per ounce, as it has cleared a resistance at $1,257, Reuters technicals analyst Wang Tao said.

Holdings of SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 0.15 percent to 802.24 tonnes on Friday.

Among other precious metals, silver rose 0.7 percent at $16.11 an ounce.

Platinum gained 1.2 percent to $850.15 per ounce and palladium was 0.4 percent higher at $957 an ounce.

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