LONDON: Gold touched its highest price in six weeks on Thursday, lifted by short-covering and a weak dollar as investors bet that US interest rates could be kept low for longer.

The US Federal Reserve kept interest rates unchanged on Wednesday, but appeared less confident than it had about inflation picking up. The resulting fall in the greenback is a boon for dollar-denominated gold since it makes the metal less expensive for investors paying in other currencies.

Spot gold was up 0.1 per cent at $1,261.74 an ounce at 1420 GMT after peaking at $1,264.90, its highest since June 15.

“Gold has been benefiting a lot recently from the weaker US dollar plus some short-covering on the futures market, where you’ve had record short positions,” analyst Carsten Menke at Julius Baer in Zurich said. “The normalisation of positioning will leave about a 4 to 5pc upside from these levels, based on history, which would be towards $1,300.”

Published in Dawn, July 28th, 2017