Gold hits 1-week high as dollar softens; palladium near record

BENGALURU: Gold rose to a one-week high on Friday as the dollar softened following recent gains on uncertainty over Britain's exit from the European Union, while palladium held near a record high, putting it close to the price of bullion.

The surge in palladium, used as an emissions-reducing auto catalyst for vehicles, reflected speculative buying driven by expectations of increased demand in a tight market, analysts said.

Spot gold was up 0.2 percent at $1,215.33 per ounce by 1126 GMT, having touched its highest since Nov. 9 at $1,218.33.

US gold futures gained 0.1 percent to $1,216.3.

"Investors are a bit more interested in gold ... the momentum is up, we may go to $1,250 in the short term," ABN AMRO analyst Georgette Boele said.

The dollar inched down to 96.76 against a basket of major currencies after British Prime Minister Theresa May clung to her Brexit plan despite the resignations of senior ministers.

A weaker dollar makes bullion cheaper for holders of other currencies.

"Gold should continue to find demand on dips, provided the US dollar remains in check," Stephen Innes, APAC trading head at OANDA in Singapore, said in a note.

The greenback has emerged as a dominant safe-haven asset this year on the back of a US-China trade dispute, denting the appeal of gold, which has fallen 11 percent from an April peak.

Palladium edged 0.6 percent higher to $1,163.50 per ounce, having hit a record high of $1,178.30 in the previous session. It was on track for its biggest weekly gain since Sept. 21, having risen more than 4 percent so far.

Palladium is the only precious metal on track to gain this year.

"Prices are mainly driven by speculative traders and trend followers in the futures market partly due to expectations of stimulus in China," Julius Baer analyst Carsten Menke said.

"In the medium to longer term, I do not think these price levels are sustainable ... also assuming we do get some sort of stimulus in China that pulls more and more demand into the present and weighs on the future demand outlook for the Chinese car market."

Car dealers in China have been pushing for Beijing to support the sector, including a proposal to cut the purchase tax on some smaller cars.

Silver was down 0.4 percent at $14.23 per ounce, on course for a roughly 1 percent gain on the week.

Platinum fell 0.6 percent to $836 an ounce, down more than 1 percent for the week so far.