Gold prices inch higher as dollar eases

Reuters
FILE PHOTO: Gold jewellery is displayed at a shop in New Delhi, India, March 1, 2016. REUTERS/Anindito Mukherjee

By Eileen Soreng

(Reuters) - Gold prices edged higher on Thursday as the dollar weakened against the pound and euro after the British cabinet approved the prime minister's draft Brexit plan.

Both spot gold and U.S. gold futures were up 0.1 percent, at $1,212.21 and $1,211.7 per ounce respectively at 0749 GMT.

"There's going to be a bid for gold provided the dollar continues to slide," said Stephen Innes, APAC trading head at OANDA in Singapore.

The dollar index, which measures the greenback against a basket of six major currencies, traded at 96.84, off a 16-month high hit on Monday.

"We could see further slide in the dollar since we didn't get any follow-through on the bullish consumer price index effect," Innes added.

U.S. consumer prices increased by the most in nine months in October amid gains in the cost of gasoline and rents, pointing to steadily rising inflation that likely will keep the Federal Reserve on track to raise interest rates again next month.

Meanwhile, Asian stocks rose on Thursday, supported by a bounce in Chinese shares on news that Beijing has delivered a written response to U.S. trade demands, raising hopes the two sides could resume negotiations to end their trade war.

U.S. President Donald Trump and is expected to meet Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina at the end of November and in early December.

Gold has fallen more than 11 percent from a peak in April as investors flock to the dollar, with U.S.-China trade friction unfolding against a backdrop of higher U.S. interest rates.

"If a good trade deal comes out of the upcoming talks (between China and the United States) it could be positive for gold," said Renisha Chainani, head of commodity and currency research at Monarch Networth Capital.

"Gold prices have taken important support level at $1,200 and rebounded and I think this uptrend would continue."

Spot gold may extend its bounce to $1,223 per ounce, following its stabilization around a support at $1,195, said Reuters technical analyst Wang Tao.

Among other precious metals, silver was up 0.4 percent at $14.19 per ounce. The metal fell to its lowest since Jan. 21, 2016 at $13.85 in the previous session.

Platinum rose 0.2 percent to $836.80 an ounce, while palladium was 0.4 percent higher at $1,128.90 per ounce.

(Reporting by Eileen Soreng and Karen Rodrigues in Bengaluru, Editing by Amrutha Gayathri and Subhranshu Sahu)