Gold prices rises on weaker US dollar

Gold prices edged up on Friday to a one-week high as the dollar weakened on receding fears of a full-blown Sino-U.S. trade war, keeping the yellow metal on track for its first weekly gain in four.

Spot gold was up 0.3 percent at $1,210.68 by 0712 GMT, after touching its highest since Sept. 13 at $1,211.02. It has risen 1.3 percent so far this week.

“Higher gold prices are due to the fact that China-U.S. trade tensions have somewhat dissipated,” OCBC analyst Barnabas Gan said.

New U.S. and Chinese tariffs on each other’s goods were set at lower rates this week than previously expected, raising hopes that hostilities between the world’s two largest economies may be easing.

Investors have been buying the dollar believing that the United States has less to lose from the dispute. But the dollar has weakened this week, with investor flows being diverted away from the greenback to its peers such as emerging market currencies as trade war concerns have ebbed.

Gold has declined about 11.6 percent from a peak in April, hurt by the intensifying U.S.-China trade dispute and on rising U.S. interest rates.

Investors are awaiting next week’s Federal Reserve meeting. The U.S. central bank is widely expected to raise benchmark interest rates and shed light on the path for future rate hikes.

The dollar index was hovering near a 10-week low against a basket of major currencies. Data and events next week will give traders a much better idea about the state of the US economy and may well revive the dollar, to the detriment of gold.