By Peter Hobson
LONDON (Reuters) - Gold prices climbed on Thursday to touch their highest since August 2016 as a weakening dollar helped it to extend gains of 10 percent since mid-December.
The dollar plunged to a three-year low against a basket of major currencies after the U.S. treasury secretary said he welcomed a weaker greenback, making gold cheaper for non-U.S. investors.
The lower dollar could also drive prices higher in the United States and increase demand for gold as a hedge against inflation.
"Gold is benefiting tremendously from the weaker dollar," said ETF Securities analyst Nitesh Shah.
Spot gold was up 0.1 at $1,359.92 an ounce at 1303 GMT, having earlier hit $1,366.07, its highest since Aug. 3, 2016. U.S. gold futures rose 0.2 percent to $1,359.20.
Gold has broken above its 2017 high of $1,357.54, a key technical level, with further resistance around $1,370 and the 2016 high of $1,374.91.
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Momentum indicators signalled that gold should rise further, ScotiaMocatta analysts said.
"Exchange-traded fund (ETF) holdings (of gold) continue to increase ... we also see large open interest around the $1,350 strike level for the upcoming expiry, which should help to keep prices buoyant over the near term," MKS PAMP trader Sam Laughlin said in a note.
Holdings of gold in ETFs tracked by Reuters and bets by funds on higher gold prices on the Comex exchange have surged in recent weeks.
The market was looking ahead to a news conference by European Central Bank chief Mario Draghi at 1330 GMT after the bank kept its policy unchanged on Thursday.
Draghi is expected to pour cold water on any view that the ECB is speeding towards an interest rate increase.
"The ECB meeting on Thursday will be pivotal (for gold), as it could spark the euro (and gold) higher, especially if the central bank signals a policy shift," INTL FCStone analyst Edward Meir said in a note.
In other precious metals, silver was down 0.2 percent at $17.54 an ounce after touching $17.70, its highest since mid-September. It jumped 3 percent on Wednesday in the biggest daily gain since July 2016.
Platinum was up 0.8 percent at $1,019.90 after hitting its highest since March 2017 at $1,024.30.
Palladium fell by 0.6 percent to $1,103.72.
(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by David Goodman)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)