Gold prices were trading near the highest level in five months on Thursday boosted by weakness in the U.S. dollar after U.S. President Donald Trump said the currency was too strong.
Gold for June delivery was at $1,287.55 on the Comex division of the New York Mercantile Exchange by 08.00 GMT, after going as high as $1,290.05 overnight, the most since November 9.
In an interview in the Wall Street Journal on Wednesday Trump said the U.S. dollar “is getting too strong” and would eventually hurt the economy. Trump also said he would prefer the Federal Reserve keep interest rates low.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 100.13 after touching a two-week low of 99.94 overnight.
Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold has already risen 2.5% so far this week as geopolitical concerns spurred increased safe haven demand for the precious metal.
Market sentiment has been hit by a combination of worries over U.S. military action against Syria and North Korea and the narrowing race in the French presidential election.
Some investors increase their gold allocations in turbulent times, believing the metal will hold its value better than other assets if markets turn rocky.
Source: UK Investing.com