Gold prices firm as softer dollar, Evergrande woes lift appeal

[BENGALURU] Gold prices bounced off 1-1/2-month lows on Friday, buoyed by safe-haven demand as investors grew wary over cash-strapped China Evergrande's fate while a softer dollar also lifted the metal's allure for holders of other currencies.

Spot gold was up 0.6 per cent to US$1,753.50 per ounce by 6.59am GMT. Prices hit their lowest level since Aug 11 at US$1,737.46 on Thursday. US gold futures rose 0.3 per cent to US$1,754.40.

The dollar index lingered near a one-week low touched on Thursday.

"Asian investors could be building gold to protect against undesirable developments in the Evergrande saga over the weekend," said Jeffrey Halley, a senior market analyst for Asia Pacific at Oanda, adding the metal was likely to trade in a US$1,740-US$1,780 range in the near term.

Asian stock markets were on edge, hurt by persistent uncertainty around the fate of debt-ridden China Evergrande.

Peter Fung, head of dealing at Wing Fung Precious Metals, said uncertainty around Evergrande's debt also spurred demand for physical gold in top consumer China, near the US$1,750 level.

However, bullion prices were expected to come under pressure in the medium term with major central banks signalling tapering of pandemic-era stimulus, analysts said.

The US Federal Reserve signalled an earlier-than-expected rate hike this week.

"We anticipate greater outflows from ETFs and non-commercial gold futures," UBS wrote in a note, adding it expected gold prices at US$1,600 by mid-2022.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to the lowest level since April 2020 on Thursday.

Silver climbed 0.9 per cent to US$22.68 per ounce and was up 1.2 per cent for the week so far.

Palladium rose 1.1 per cent to US$2,005.68 but was on track for a third straight weekly decline.

Platinum slipped 0.7 per cent to US$982.50. The metal, however, was headed for a weekly gain of about 4 per cent, its biggest in six weeks.

REUTERS