Gold rises, holds near six-month highs on volatile shares

Gold rose on Thursday, trading near six-month highs hit in the previous session, supported by a weaker dollar and buyers hedging against volatile stock markets.

Spot gold rose 0.5 percent at $1,272.56 per ounce as of 1055 GMT, after hitting its highest since June 19 at $1,279.06 in the previous session. U.S. gold futures rose 0.2 percent to $1,275.10 per ounce. 

"The risk-averse sentiment is the most dominant force today. Investors are busy profit-taking in equities, which is benefiting gold," said Naeem Aslam, chief market analyst at Think Markets UK.

World stocks bounced off a near two-year low on Thursday following a dramatic Wall Street surge on Wednesday. However, the rally fizzled somewhat in Europe where shares erased most of their early gains. 

"There has been an extensive surge in the gold exchange traded fund holdings and there is absolutely no shortage of momentum there. Investors are just preparing themselves by buying gold as there are several uncertainties heading into 2019," Aslam said.

Investor confidence in bullion were reflected in a surge in the holdings of SPDR Gold, the largest exchange traded fund. SPDR holdings rose 2.1 percent on Wednesday, their best one-day percentage gain since July 2016.

SPDR holdings are at their highest level since August, having and have risen about 8 percent since touching more than 2-1/2-year lows in October. 

"The outlook for gold is much brighter now as we broke the 200-day moving average last week," said ABN AMRO analyst Georgette Boele, adding that a weaker dollar was also helping gold. 

The dollar index, a gauge of its value versus six major peers, slipped 0.3 percent on Wednesday, making gold cheaper for holders of other currencies. [USD/]

U.S. President Donald Trump said on Wednesday he is prepared to wait as long as it takes to get $5 billion from taxpayers for his U.S.-Mexico border wall, a demand that has triggered a partial shutdown of the federal government that is now in its fifth day with no immediate end in sight.

Among other metals, silver was up 0.4 percent to $15.09 per ounce, after hitting its highest level since mid-August at $15.17 on Wednesday. Platinum rose 0.4 percent to $797.40 per ounce, while palladium rose 0.3 percent to $1,258.62.