Gold prices inch higher as dollar softens

“I am very bullish on gold in this setup into 2019.”

The dollar index, a measure of the greenback’s strength versus a group of six major peers, edged lower after rallying in the previous session as a vote on Brexit deal was postponed.

Investors are now focused on the U.S. Federal Reserve’s Dec. 18-19 policy meeting for clues on future rate hikes.

The Fed’s plans to continue raising interest rates next year were met with more skepticism on Wall Street on December 10, with futures traders betting on a pause and one major bank partially walking back a hawkish prediction.

“Markets still see an increase in December but even one further hike in 2019 is now being questioned whereas two of them were fully priced in just a month ago,” said Ilya Spivak, a currency strategist for DailyFX.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

“Technically, the break of $1,250 will be very significant… $1,250 is a very key point and on the bottom it’s $1,240,” OANDA’s Innes said.

Meanwhile, hedge funds and money managers trimmed their net short positions in Comex gold and silver contracts in the week to Dec. 4, the U.S. Commodity Futures Trading Commission (CFTC) said on December 10.

Among other precious metals, spot silver was up 0.3 percent at $14.57 per ounce, while palladium rose 0.3 percent to $1,221.35.

Platinum was down 0.4 percent at $782.10 per ounce. Prices had slipped to their lowest since Sept. 10 at $773.50 in the previous session.