Gold prices rose on Wednesday as the dollar weakened and stock markets were held down by a global cyber attack and delay to US healthcare legislation which fuelled doubts about President Donald Trump's ability to pass stimulus measures. The dollar sank to its lowest since November while the euro hit a one-year high after European Central Bank President Mario Draghi appeared to hint that stimulus could be trimmed this year, though sources later said he had been misinterpreted.
A weaker dollar makes dollar-denominated bullion cheaper for holders of other currencies and can increase demand. Spot gold was up 0.2 percent at $1,249.81 an ounce at 1357 GMT, while US gold futures were 0.3 percent higher at $1,250.40 an ounce.
Gold prices have been held down in recent months as stock markets rose and hit record highs in the United States and Britain, offering better investment returns. But the risk of a deeper stock market correction meant investors now wanted to keep their gold, said Ole Hansen, head of commodities strategy at Saxo Bank.
"With the selling appetite fading, it gives some room to the upside," he said. Stock investors were also on edge after US Federal Reserve Chair Janet Yellen said shares may be over-valued, Hansen said. However, bond yields rose after Draghi's comments on ECB stimulus, limiting the appeal of non-yielding bullion.
On the technical side, gold rose above its 100-day moving average. Fibonacci resistance was at $1,255.20, analysts at ScotiaMocatta said in a note. "Expect to see prices perking up heading into the latter part of the week, especially if the combination of a weaker dollar and US equity markets stays with us for a little while longer," said INTL FCStone analyst Edward Meir in a note.
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