Investing.com - Gold prices rose to a two-week high amid low-volume holiday trading on Thursday, as the U.S. dollar and global stock markets pulled back, boosting the appeal of the yellow metal.
Gold for February delivery on the Comex division of the New York Mercantile Exchange rose to a session peak of $1,151.30 a troy ounce, a level not seen since December 14.
It was last at $1,149.25 by 5:00AM ET (10:00GMT), up $8.35, or around 0.8%, adding to a gain of $2.10, or 0.2%, a day earlier. Prices of the yellow metal sank to an 11-month low of $1,124.30 earlier in December.
Trade is expected to remain thin for the rest of the week as most investors are away for year-end holidays.
The U.S. dollar slumped on Thursday, slipping from its 14-year-high against a basket of currencies as investors took profits in the run-up to the end of the year.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.5% at 102.71 in early trade, pulling back from last week's 14-year peak of 103.62.
Meanwhile, European and Asian stock markets slumped in wake of a downbeat performance on Wall Street overnight, where shares fell across the board with the S&P 500 posting its largest daily drop since October 11.
Prices of the yellow metal have fallen sharply since Donald Trump was elected president as a soaring U.S. dollar, rising Treasury yields and a record-breaking rally on Wall Street have dampened its appeal.
Market analysts warned that the outlook for gold remains cloudy in the near-term, given expectations for higher U.S. interest rates in the months ahead.
The Fed hiked interest rates for the first time in a year earlier this month and projected three more increases in 2017.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Also on the Comex, silver futures for March delivery jumped 18.5 cents, or 1.15%, to $16.22 a troy ounce during morning hours in New York, rebounding from last week's eight-month low of $15.67.
Meanwhile, platinum tacked on 0.65% to $908.10 and palladium added 0.6% to $671.10 an ounce.
Elsewhere in metals trading, copper futures rose 1.5 cents, or 0.6%, to $2.516 a pound.