At its highest point so far today, spot gold scaled 0.2 percent to $1,284.09 an ounce as a dip in the US dollar helped lift the precious metal to its best level since June 15. But despite the six-month peak, spot prices are still down 1.5 percent in the year to date and are set to record their first annual decline since 2015. As of just after 15:00 GMT, spot gold was worth $1,280.51 an ounce. Georgette Boele, ABN AMRO analyst, said: “Gold started well in 2018, but a recovery in the US dollar weakened prices and uncertainty on the United States-China trade front weakened the yuan, further pulling gold down.”
Ms Boele added that she expects gold prices to hit $1,400 in 2019 as stabilisation in the yuan and a dented US dollar has helped put the metal on track for its best December in a decade.
Gold was boosted today after suggestions that an ongoing trade war between the United States and China was set to simmer after months of grappling between the two economic powerhouses.
US President Donald Trump indicated that a possible trade deal was in the works, sparking hopes of an end of a bitter tit-for-tat sanctions row.
Mr Trump tweeted on Sunday that he had a “long and very good call” with his Chinese counterpart Xi Jinping.
Despite being weakened, the US dollar was still set to close the year up nearly 5 percent against its rivals, lifted by rising interest rates.
The pound was trading with more than half a percent increase versus the American greenback this afternoon, reaching as high at $1.2790.
The strength of the US dollar send the price of gold plunging to a 20-month low in August but the metal has since recovered.
It jumped about 5 percent in December due in part to wild swings in equities which analysts said boosted its appeal as a safe store of value.
The outlook for the dollar is also more subdued going into 2019, with growing expectations that a three-year rate hiking cycle in the US has come to a close.
ING said in its commodities outlook for next year: “The key driver in this strength has been growing demand from the auto sector with stricter pollution standards in China increasing the amount of palladium used in auto catalysts.”
Silver rose 1 percent to $15.49 an ounce in the session but was down 8.5 percent for 2018.
Platinum edged up by 0.8 percent to $795.60, making little impact on a decline of about 14 percent for the year.