BENGALURU (REUTERS) - Gold prices rose to a near-two month high on Thursday (Dec 26), holding firm above the key US$1,500 level, as investors braced for a robust equity rally to run out of steam, while volumes remained low in holiday trade.
Spot gold rose 0.8 per cent to US$1,511.13 per ounce as of 6.51pm GMT. Prices notched US$1,512.30 an ounce, their highest since Nov 4 earlier.
US gold futures settled 0.7 per cent higher at US$1,514.40 per ounce.
"US$1,500 is a strong psychological up-point. Once we saw that breakout, we are moving past that first point of resistance at US$1,512. This could be the break we were looking for as we run up to US$1,600," said Alex Turro, market strategist at RJO Futures.
"Gold is going to be supported moving forward through central bank buying, enhanced demand, strong technicals and support in the market."
The metal has gained about 18 per cent so far this year and is on track for its best year since 2010, due mainly to the protracted United States-China trade dispute and its impact on the global economy.
Beijing said on Wednesday it is in close touch with Washington on a trade deal signing ceremony, a day after US President Donald Trump said that he and Chinese President Xi Jinping will have a ceremony to sign the recently struck trade deal.
Hopes of a breakthrough in the trade war, combined with recent positive domestic data, have powered US stock markets to record highs in the past few weeks and set the S&P 500 on course for its best year since 2013.
"As portfolio managers rebalance equity portfolios and take profits off the table, they reinvest those funds into other asset classes, and gold is a beneficiary of that," said David Meger, director of metals trading at High Ridge Futures.
"The Fed leaving rates at an accommodative stance, along with the liquidity offered by the repo rate" has also provided support to bullion, he added.
US Federal Reserve officials voted unanimously to leave interest rates unchanged earlier this month, and have signalled the central bank would require a material change to outlook to either raise or lower borrowing costs.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.
Amongst other precious metals, silver rose 0.7 per cent to US$17.90 an ounce after hitting its highest since Nov 5.
Platinum gained 1.5 per cent to US$952.70, its highest since Sept 24. Palladium climbed nearly 1 per cent to US$1,901.54 per ounce.
