Gold climbs on weaker dollar, stumbling stocks

Spot gold was up 0.3% at $1,257.95 an ounce, while US gold futures advanced 0.5% to $1,259.80

Gold edged up on Thursday on a weaker dollar and as equities plunged on soft Chinese trade data that stoked concerns about the health of the world's No.2 economy.

The bullion rose even after minutes from a US Federal Reserve meeting last month signalled that the central bank could raise interest rates in December.

"Despite the FOMC minutes that were released overnight, gold prices didn't really move. This strongly suggests that gold prices at this juncture, of $1,250, have already digested the probability of a rate hike around this year," said OCBC Bank analyst Barnabas Gan.

Gan added that various headwinds to the global economy would buoy safe-haven demand for bullion, with the metal likely to touch $1,300 by the year-end.

 

Several voting Federal Reserve policymakers judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen but doubts on inflation remained, according to the minutes of the Fed's September policy meeting released on Wednesday.

"Gold has been under pressure but we do not think the FOMC minutes will add materially to the downwards slant of the market," HSBC analyst James Steel wrote in a note.

"But without further increases, some of the pressure on gold may come off."

Spot gold was up 0.3 per cent at $1,257.95 an ounce by 0742 GMT, while US gold futures advanced 0.5 per cent to $1,259.80 an ounce.

"There is a lot of buying on the physical side in Asia, mainly from China and buying from exchange-traded funds after recent dips," said a precious metals trader with a China-based bank.

The dollar index, which measures the greenback against a basket of six major currencies, was down nearly 0.1 per cent at 97.924.

Asian stocks stumbled to three-week lows and US stock futures and Treasury yields fell after China's September trade data showed a sharp decline in exports.

China's September exports dropped 10 percent from a year earlier, far more than what markets had expected, while imports unexpectedly shrank 1.9 per cent after an encouraging bump up in August, official data showed on Thursday.

Among other precious metals, silver gained 0.5 per cent to $17.54 an ounce, while platinum shed 0.4 per cent to $938.49 an ounce.

Palladium was down 1.5 per cent at $639.60 an ounce after touching a low of $636.72, its weakest since July 18, earlier in the session.