Gold clawed higher on Thursday, propelled by a weaker dollar, short-covering and physical buying in Asia. Worries about new US trade tariffs on China cast a cloud over the market, however. "We're seeing a little bit of a relief rally for the precious metals," said Chris Gaffney, president of world markets at TIAA Bank.
The relief bounce and gold's strong oversold conditions are leading some investors to short-cover, said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan. "The bottom is very close because I think the US dollar is close to reaching the top, together with the peak of the US economy," he said.
Spot gold gained 0.3 percent at $1,199.68 per ounce by 1:54 p.m. EDT (1754 GMT), after rising 0.5 percent in the previous session. US gold futures futures for December delivery settled up $3, or 0.3 percent, at $1,204.30 per ounce. Gold has tumbled more than 12 percent from a peak of $1,365.23 in April. The price levels have recently sparked a lot of physical buying, not just in active gold-buying countries like India and China but also in Southeast Asia for investment purposes, traders and analysts said.
India's gold imports more than doubled in August to their highest level in 15 months as lower prices prompted manufacturers to replenish inventory. Spot silver lost percent at $14.14 per ounce. The metal hit an over 2-1/2-year low at $13.97 early this week. Platinum climbed 1 percent to $790.90 per ounce while palladium rose 0.1 percent at $973.50.