Gold prices rose to their highest in two weeks on Thursday, as the US dollar fell, but gains were limited on expectations of more rate hikes by the US Federal Reserve next year. Spot gold was up 0.5 percent at $1,147.56 an ounce by 0631 GMT, after reaching its highest since December 14. at $1,149.84 earlier in the session. The metal was also on track for its biggest one-day rise since November 28.
US gold futures were up 0.7 percent at $1,148.50 per ounce. "I think it's because of the dollar, which has weakened a little bit," said Helen Lau, an analyst at Argonaut Securities in Hong Kong. The dollar index, which measures the greenback against a basket of currencies, eased about 0.4 percent at 102.910. Gold was poised to end the year up after three straight annual declines. Bullion has risen over 8 percent so far this year despite an 8 percent drop in November.
"With interest rates rising in the US, gold will be a less attractive investment, and this explains some of the weakness the commodity has been facing in the recent months," said Mihir Kapadia, CEO of London-based Sun Global Investments Ltd. Shanghai Gold Exchange, the world's biggest physical bullion exchange, said on Wednesday it will curb the amount of gold investors can trade at one time, a move analysts said would limit institutional investors' influence on prices.
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