LONDON, Feb 15 (Reuters): Gold was on track for its fourth straight session of gains on Thursday as the dollar skidded to its lowest in two weeks on concerns about the impact of high levels of US debt and tax cuts.
Spot gold was up 0.2 percent at $1,353.73 an ounce by 1106 GMT after earlier hitting its highest since Jan 25 at $1,357.08. It had risen 1.6 percent on Wednesday, its highest one-day gain since May 2017. US gold futureswere down 0.1 per cent at $1,356.8 per ounce.
"We are back to what was driving gold prior to that little spike in volatility last week which is the direction of the dollar and the longer term direction of US debt and how it's going to be serviced," ICBC Standard Bank analyst Tom Kendall said.
The dollar index against a basket of currencies was down 0.5 percent at 88.686, after earlier hitting a near two-week low of 88.585.
A recovery in broader risk sentiment was also seen weighing on the dollar, which had gained during the market turmoil earlier this month.
The US currency has been hit by a variety of setbacks this year, including from prospects Washington might pursue a weak dollar strategy to the perceived erosion of its yield advantage as other countries part with easier monetary policy. Concerns about the growing US fiscal deficit have also weighed on the currency.
Inflation fears boost gold, which is seen as a safe haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive since it is not interest-yielding.
BMI Research was neutral on gold prices because of mixed signals from wider financial markets, it said in its gold outlook.
"Key resistance for prices comes in around the 2016 high of $1,375 per ounce and we would have to see this level decisively broken before calling for significant near-term gains," the research group said in a note.
Among other precious metals, silver was up 0.3 per cent at $16.92 an ounce after earlier hitting a more than one-week high of $16.98.
Palladium was 1.9 per cent higher at $1,092.47, after earlier hitting a one-week top of $1,020.90.
Platinum was up 0.7 per cent at $1,003.90, after earlier hitting $1,007.10, its highest in two weeks.
