Gold price firms within narrow range as dollar weakens

New York (Nov 21)  Gold edged higher on Wednesday as the dollar weakened after the previous session's rally, though gains were seen as limited by a recovery in equity markets after a sell-off.

Spot gold was up 0.1 percent at $1,222.65 per ounce at 1056 GMT, but moved in a narrow $6 range ahead of the U.S. Thanksgiving holiday. U.S. gold futures rose 0.2 percent to $1,223.3 per ounce.

Gold, which sometimes benefits from volatility in the wider markets, ended Tuesday lower as investors sought refuge in the dollar from a slide in world stocks and crude oil prices, but the metal fared better than other commodities, analysts said.

"The big sell-off in equity markets, the big sell-off in oil helped to prop up gold prices, maybe not to a degree many would expect, but it did hold up relatively well compared to the rest of the commodities," ING analyst Warren Patterson said.

"It's a weaker dollar that has made prices firmer today," he said. "There is also growing concern around the global economy as a result of trade issues of late that has provided some support to gold."

The dollar index, which measures the greenback against a basket of major currencies, weakened after posting its biggest daily percentage gain in two weeks on Tuesday as a sell-off in world stocks spurred safe-haven bids. The U.S. unit, weakness in which makes gold cheaper for holders of other currencies, has also been pressured this week by dovish comments by U.S. Federal Reserve officials, which cast doubts over the pace of monetary tightening Meanwhile, world stocks attempted to steady following a sell-off in the previous session as investors grew more worried about economic growth prospects. Investors were now looking out for a G20 summit in Argentina scheduled for later this month, when U.S. President Donald Trump is expected to meet Chinese President Xi Jinping to discuss their bilateral trade dispute. "If a deal is reached then the gold price could drop as reduced economic uncertainty leads to lower safe haven demand and allows for more risk-on investing," Heraeus said in a note.

Among other precious metals, silver climbed 0.5 percent at $14.38 an ounce. Silver hit its highest level since Nov. 8 at $14.49 in the previous session.

Palladium gained 1.02 percent to $1,152.00 per ounce, while platinum was up 0.9 percent at $845.40 per ounce.

Reuters