Gold up near August 2016 high as dollar drops more

By Renita D. Young and Peter Hobson

NEW YORK/LONDON (Reuters) - Gold rose on Thursday, extending gains of around 10 percent since mid-December and overcoming technical resistance to stay near its highest since August 2016, as the dollar weakened further.

The dollar slid to its weakest in three years, making bullion cheaper for users of other currencies, fuelling demand and driving up gold prices. <. DXY>

Spot gold was up 0.3 percent at $1,361.51 per ounce by 1:37 p.m. EST (1837 GMT) after touching $1,366.07, the highest since Aug. 3, 2016. On Wednesday it jumped 1.3 percent in the biggest daily gain since August.

U. S. gold futures for February delivery settled up $6.60, or 0.5 percent, at $1,362.90 per ounce.

Comments by European Central Bank chief Mario Draghi gave the euro a big boost against the dollar on Thursday, a day after the greenback skidded lower when the U.

S. treasury secretary said he welcomed a weaker currency.

"We had priced in the projected interest rate moves of the U. S. Fed, but now we're seeing other central banks talking about raising rates and pulling back on liquidity," said Chris Gaffney president of world markets at St. Louis-based EverBank.

"That is shifting sentiment toward other currencies and away from the dollar."

Momentum indicators signalled that gold should rise further, underpinned by fears that global equities could retreat from record highs, a hedge against inflation and concern over protectionism in the United States, analysts said.

"It is possible that the dollar is (also) weakening out of concern for the U. S. fiscal condition, which has not been the case of the last several years," said Trey Reik, senior portfolio manager of Sprott Asset Management USA in Carlsbad, California.

Despite support from the dollar, gold ran into resistance after prices zoomed above their 2017 high and neared peaks hit in 2016 and 2014, said Saxo Bank analyst Ole Hansen.

"Having seen such a big surge, the market is just taking some chips off the table," he said.

"The explosive move we have seen almost continuously since Dec. 12 is really quite amazing. For this market to have a chance of going higher it desperately needs to consolidate."

Gold prices resumed their rise later.

In other precious metals, silver was up 0.1 percent at $17.58 an ounce after touching $17.70, its highest since Sept. 15.

Platinum was up 1.3 percent at $1,025.60 after hitting its highest since February 2017 at $1,027.60.

Palladium fell by 0.8 percent to $1,101.22.

(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by David Gregorio)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)