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Gold Hits Near-5-Month High as Dollar Struggles

Investing.com - The dollar's inability to attract a strong bid seems to be working well for gold.

New York-traded futures of the yellow metal hit a near-five-month high on Tuesday as the greenback struggled to advance, despite wide expectations of a fourth Federal Reserve rate hike this month. Fear that the Fed will pause after the December round weighed on the dollar.

"The dollar is weaker with the 10-year U.S. Treasury note also benign ahead of the Fed rate hike, which is already well priced into the market," said George Gero, precious metals analyst at RBC Wealth Management in New York.

Adding to the positive sentiment in bullion was Tuesday's slide in stocks on signs of fresh potential trouble in U.S.-China trade relations and a continued inversion on parts of the Treasury yield curve.

"At this rate, we may finally see funds and asset allocators add to their positions in gold, which are starting to trickle in now," Gero said.

Benchmark COMEXgold futures for February settled up $7, or 0.6%, at 1,246.60 per troy ounce. The session high of $1,247.40 marked a peak from July 11.

The dollar index was nearly flat at 96.903 by 3:49 PM ET (20:49 GMT) after dipping earlier to an intraday low of 96.305.

Just a month back, the dollar was still in rally mode, extending its role as a shadow safe haven to gold. But it lost its upward momentum on dovish signals from the Fed, which indicated that rate hikes from 2019 will have to be reevaluated on economic and inflation data vs. previous assertions of a more hawkish policy.

Among other precious metals on COMEX, silver rose 0.7% to $14.60 per ounce.

Palladium jumped 1.5% to $1,182.85 per ounce, while sister metal platinum slid 0.8% to $804.20.

In base metals, COMEX copper slumped by 1.8% to $2.76 per pound.

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