Gold hit two-week highs before settling a touch lower, but still above the $1,200 perch Thursday as profit-takers cashed in on the safe-haven demand for bullion that's been trending lately.
Gold futures on New York’s COMEX swung in an $11 band, one of its bigger ranges for this week, after a spike in U.S. bond yields sent risk-averse investors out of equities and into gold, opening an opportunity for those looking to exit at a higher $1,200-an-ounce level, traders said.
After hitting 20-month highs above $1,365 in April, gold fell 12% on the combination of a rallying dollar, rising U.S. interest rates and fears of a global trade war.
Lately though, the precious metal has shown some unusual grit, outperforming the dollar and rallying above the $1,200 level critical to the confidence of gold bugs.
“Given the strength in the dollar, one might have expected gold and the rest of the metals markets to have come under aggressive currency related selling,” ADM Investor Services said in an outlook on gold.
At Thursday’s settlement, December gold futures on COMEX settled down $1.30, or 0.1%, at $1,201.60. It earlier rallied to $1,210.60, its highest level since Sept. 24.
The dollar was also down on Thursday after an early rally. The U.S.dollar index , which measures the greenback’s strength against a basket of six major currencies, dipped 0.2% to 95.49 by 2.36 PM ET (18:36 GMT) after hitting a one-and-a-half-month high of 95.78 earlier.
A weaker dollar can make dollar denominated assets, like gold, less expensive to potential buyers holding other currencies.
Safe-haven demand for gold, underpinned earlier this week by Italy’s budget crisis, was in play again on Thursday as U.S. stocks tumbled and Treasury yields spiked on robust U.S. economic data and indications of more interest rates hikes.
The U.S. central bank added a quarter point in the final week of September to bring rates to between 2.0% and 2.25% and indicated another increase in December. Fed Chairman Jerome Powell said Wednesday that rates may rise above an estimated "neutral" setting as the economy continues to grow.
While gold is on track for a weekly gain, the precious metal had ended the third quarter down 4.6% after falling 0.9% in September.