Gold edges higher as softer dollar, Gulf tensions lend support

• "Investors are all waiting on any further developments in the trade negotiations as they move towards October meeting and that may provide next big driver for gold prices,"
• The Fed cut interest rates for the second time this year on Wednesday to help sustain economic expansion but gave mixed signals on future rate cuts.

Gold prices rose on Friday and were headed for their first weekly gain in a month, supported by a softer dollar, tensions in the Middle East and caution about Sino-US trade talks, while palladium climbed to a fresh record peak.

Spot gold was up 0.3pc at $1,503.36 per ounce, as of 0800 GMT, up about 1pc this week. US gold futures were up 0.5pc at $1,513.5 per ounce.

"A weaker US dollar is giving gold a little bit of an upward drift," said Michael McCarthy, chief market strategist at CMC Markets, adding that "prices are still very much in the middle of a trading range and pinned to $1,500 level."

The dollar slipped on Friday and was headed for a third straight week of losses as central banks in Japan, the UK and Switzerland refrained from cutting rates.

"Investors are all waiting on any further developments in the trade negotiations as they move towards October meeting and that may provide next big driver for gold prices," McCarthy said.

US and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months on Thursday, trying to lay the groundwork for high-level talks in early October.

Gold prices have risen about 17pc this year mainly on US-China trade tensions, concerns over the global economic growth outlook and prospects of monetary easing by central banks.

The Fed cut interest rates for the second time this year on Wednesday to help sustain economic expansion but gave mixed signals on future rate cuts.

Also, giving bullion a lift were tensions in the Middle East as the United States said on Thursday it was building a coalition to deter Iranian threats following a weekend attack on Saudi Arabian oil facilities.

The strategy for retaliation against the attacks on Saudi oil plants is not clear and the uncertainties are keeping gold's safe-haven bid intact, said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

On the technical front, signals are mixed for spot gold as it is stuck in a narrow range of $1,488-$1,514 per ounce, according to Reuters technical analyst Wang Tao.

Elsewhere, palladium rose 1pc to $1,640.15 per ounce, having hit a record peak of $1,646.81. Prices were up 2pc for the week in a seventh straight weekly gain.

Platinum and silver were up 0.7pc at $943.52 and $17.89 per ounce, respectively.