Gold rose on Thursday to near a five-month peak on a weaker dollar and on expectations the pace of US interest rate hikes will slow, with the bullion also getting support from falling equities. Spot gold was up 0.2 percent at $1,239.44 per ounce at 13:48 EST (1848 GMT), having earlier reached $1,244.32 per ounce, its highest since July 17. US gold futures settled up $1, or 0.1 percent, at $1,243.60.
"The weaker dollar is keeping gold positive at the moment. If you look at the other markets as well, there is a kind of risk-off situation going on," said Phil Streible, senior commodities strategist at RJO Futures in Chicago. The dollar fell about 0.4 percent as US Treasury yields tumbled.
Stock markets slumped globally for a third straight session on Thursday as the arrest in Canada of a top executive of Chinese tech giant Huawei for extradition to the United States raised fears of a flare-up in trade tensions. The interest rate futures implied traders see no more than one rate increase from the Fed in 2019, compared with expectations a month earlier for possibly two, according to CME Group's FedWatch program.
Fed policymakers are still widely expected to raise interest rates at their Dec. 18-19 meeting, but the market focus is on how many rate increases will follow in 2019. Traders' attention is now turning to Friday's US non-farm payrolls report, which is also likely to be on the US central bank's radar.
"If gold could hold above $1,235, this is definitely a very good signal, while surpassing $1,243 would open space for further recoveries," said ActivTrades chief analyst Carlo Alberto De Casa. Meanwhile, palladium dropped after outshining the yellow metal for the first time since 2002 on Wednesday.
Spot palladium slid 3.3 percent to $1,202.05 per ounce after rising to an all-time high of $1,263.56 in the previous session. Silver dipped 0.6 percent to $14.42 per ounce, while platinum fell for a third session in a row, declining 1.5 percent to $788.30 per ounce. The precious metal earlier hit an almost three-month low of $779.50.