By Sethuraman N R
BENGALURU (Reuters) - Gold held steady near 2-1/2-month highs on Tuesday as dollar weakness offset improved risk appetite among investors, reflected in recovering global stock markets.
Spot gold was unchanged at $1,226.29 per ounce by 1:52 p.m. EDT (1752 GMT), having peaked at $1,233.26 in the previous session, its highest since July 26.
U.S. gold futures settled up $0.7, or 0.1 percent, at $1,231 an ounce.
"Most of the move in gold is behind us. The Saudi situation seems to be on the mend and stock markets getting an element of support from earnings deprive gold of another reason to rally from here," INTL FC Stone analyst Edward Meir said. "Gold is being supported by a relatively softer dollar. ... We could see more of a range-bound market from here."
The U.S. dollar index dropped to more than two-week lows on Tuesday while emerging market currencies outperformed, and rising stock markets reflected improving risk appetite. [USD/] [MKTS/GLOB]
On the technical front, gold prices were trading around the 100-day moving average of $1,227.
"The near-term technical posture for the yellow metal has dramatically improved (over) the past few sessions, which continues to invite the chart-based buyers," Peter Hug, global trading director at Kitco Metals, said in a note. "Also, the recent volatility in world stock markets and some heightened geopolitical tensions are continuing to provide some demand for safe-haven gold."
Gold is usually viewed as a safe store of value during political and economic uncertainty.
"We continue to believe price risks are skewed to the upside. Should the U.S. dollar stabilise or even weaken, the macro backdrop looks more favourable for gold, particularly if its safe-haven status strengthens," Standard Chartered said in a note.
Some analysts said the recent gains in gold could also be attributed to investors unwinding bearish positions after speculators had piled up record short positions.
Holdings of SPDR Gold Trust, the largest gold-backed exchange traded fund, rose for a second straight session on Monday, adding 4.1 tonnes.
Holdings have gained about 2.5 percent in the past seven days, which, some analysts said, is a shift in perception in sentiment among gold ETF investors. SPDR Gold holdings had shed about 3.9 million ounces from a peak in April. [GOL/ETF] In other metals, silver was down 0.1 percent at $14.64 an ounce, having touched its highest since Oct. 2 at $14.85 earlier in the session. Platinum gained 0.4 percent to $842.20 after hitting its highest since July 10 at $850.10 on Monday, while palladium was down 0.3 percent at $1,080.50.
(Reporting by Sumita Layek, Nallur Sethuraman and Swati Verma in Bengaluru; Editing by Frances Kerry and Richard Chang)
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Updated Date: Oct 17, 2018 02:05:30 IST