Gold prices rose to a week high on Thursday, supported by expectations of an interest rate cut by the US Federal Reserve following soft inflation data, which also weighed on the dollar. Spot gold was up 0.3% at $1,336.82 per ounce at 0950 GMT. Prices touched $1,338.87 earlier in the session, a high since June 7. US gold futures were 0.2% higher at $1,340 an ounce. "We had disappointing US inflation data which reinforced market expectations that the Fed would cut interest rates which itself is a positive for gold and related to that we see some weakness on US dollar today," Julius Baer analyst Carsten Menke said.
"Since the beginning of June we've had quite constant inflows into physically backed gold products as investors are weighing risks related to the trade tensions between the US and China and also between US and Mexico," Julius Baer's Menke added. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes on Wednesday from 756.18 tonnes on Tuesday.
On the technical side, the next topside resistance for gold sits between $1,346-$1,349 and if this breaks a quick rise to $1,360-$1,366 would be on the cards, MKS PAMP Group said in a note.