Gold hits 2-month high as dollar struggles on Fed pause views

Gold prices advanced to their highest in about two months on Thursday, driven by US dollar's weakness and growing expectations that the Federal Reserve would conclude its aggressive rate-hiking cycle at its meeting next week, reports Reuters.
Spot gold gained 0.2 per cent to $1,980.59 per ounce by 1058 GMT, close to its highest since May 17 at $1,987.39. US gold futures also rose 0.2 per cent to $1,984.10 per ounce.
"The correction lower in the US dollar is giving gold a shot in the arm, and hence the market is targeting the psychologically important $2,000 level," said independent analyst Ross Norman.
The US dollar index was trading not far from 15-month lows, while China's yuan gained after authorities adjusted cross-border financing rules and major state-owned banks were seen selling dollars.
A weaker dollar makes gold expensive for overseas buyers, while lower interest rates tend to be beneficial for bullion as they reduce the opportunity cost of holding the non-yielding asset.
Gold prices have risen about 5.0 per cent since the end of June, when they hit over 3-month lows, with recent price gains mainly on the back of US economic readings backing views that the Fed will raise interest rates on July 26 by 25 basis points, the last increase of the current tightening cycle.
"The recent reversal in gold prices is very much driven by the expectation that the Fed is almost done in terms of interest rate hikes," said Julius Baer analyst Carsten Menke.
"That said, we believe interest rates are set to stay high and a rapid reversal of monetary policy is not imminent due to the resilience of the US economy. Furthermore, we believe that interest rate levels are too high to lure gold investors back into the market."
In other metals, spot silver added 0.1 per cent to $25.19, having hit its highest since mid-May. Platinum fell 0.3 per cent to $969.98 while palladium slid 0.4 per cent to $1,302.14.