Gold gains as risk aversion weighs on dollar

BENGALURU, Dec 06 (Reuters): Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion.

Spot gold was up 0.2 per cent at $1,239.86 per ounce, as of 0429 GMT, while US gold futures were 0.2 per cent higher at $1,244.9 per ounce.

"Markets are trying to consolidate, trying to push up higher for now," said Benjamin Lu, a commodities analyst with Phillip Futures.

A balance between a host of factors such as a rate hike by the US Federal Reserve in December, uncertainty about trade tensions between Washington and Beijing, and a flattening yield curve has helped create a premium for the bullion, Lu added.

Fed policymakers will gather at a Dec. 18-19 meeting, at which the central bank is widely expected to raise interest rates.

"Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate hike timings in 2019," said Lukman Otunuga, a research analyst at FXTM, adding that: "if the meeting echoes a similar message to (Chairman Jerome) Powell's dovish shift, gold has the potential to shine into 2019."

The dollar declined against the safe-haven yen as a spike in risk aversion pressured equities and US Treasury yields.