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Gold holds near 6-month high on softer US dollar, tumultuous stocks

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Gold prices held near six-month highs hit earlier on Friday, helped by a softer US dollar, concerns over slowing economic growth and wild swings in equities, putting bullion on track for a second straight week of gains.

[BENGALURU] Gold prices held near six-month highs hit earlier on Friday, helped by a softer US dollar, concerns over slowing economic growth and wild swings in equities, putting bullion on track for a second straight week of gains.

Spot gold was up 0.3 per cent at US$1,279.17 per ounce as of 2.50pm EST (1950 GMT), and up 1.8 per cent so far this week. Earlier it rose to US$1,282.09, the highest level since June 19.

US gold futures settled up 0.1 per cent to US$1,283 per ounce.

"A weaker US dollar is fueling higher gold prices and the volatility in the stock markets is worrying people about the prospects in 2019, which is also moving people to gold," said Walter Pehowich, executive vice-president of investment services at Dillon Gage Metals.

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"But prices are not able to extend gains as there is less liquidity in the markets and not many people want to put positions ahead of the long weekend."

The US dollar index, a gauge of the US currency's value against six major peers, fell 0.1 per cent, adding to gold's appeal by making it cheaper for holders of other currencies.

There have been wild swings in equities in the final week of 2018, with the CBOE Volatility Index, Wall Street's main fear gauge, hitting its highest level since early February before easing slightly.

Financial markets are expecting US growth to slow next year due to rising interest rates. On Thursday, a measure of US consumer confidence posted its sharpest decline in more than three years in December, rattling already nervous investors.

A darkening outlook for global economic growth, a simmering trade war between the United States and China, as well as Brexit-linked uncertainty, may trigger renewed risk aversion and help lift gold prices in 2019, said Ilya Spivak, a currency strategist at DailyFx.

Investors often use gold as a hedge against political and financial uncertainty.

"As long as the US government continues to remain shut, it may invoke some safe-haven bids and help gold to touch new highs," said Afshin Nabavi, senior vice-president at MKS SA.

Both chambers of the US Congress convened for only a few minutes late on Thursday but took no steps to end a partial federal government shutdown triggered by an impasse over a spending measure before adjourning until next week.

Among other precious metals, silver rose to a near-five-month high at US$15.39 per ounce and was last up 0.9 per cent at US$15.34. It was on track for its biggest weekly gain since August 2017, up 5 per cent so far this week.

Platinum fell 1.4 per cent to US$784.65 per ounce, while palladium was down 1.9 per cent to US$1,251.40. Palladium has gained 1.6 per cent this week.

REUTERS