Gold prices climbed Thursday as the U.S. dollar pared early gains and equities plunged on Chinese trade data that stoked concerns about the health of the world’s No.2 economy.
The climb in bullion came despite signals from the U.S. Federal Reserve minutes that the central bank could raise interest rates in December.
Spot gold was up 0.5 percent at $1,260.34 an ounce by 0405 GMT, its best one-day gain in three weeks.
U.S. gold futures advanced 0.6 percent to $1,261.30 an ounce.
“Despite the FOMC minutes that were released overnight, gold prices didn’t really move. This strongly suggests that gold prices at this juncture, of $1,250, have already digested the probability of a rate hike around this year,” said OCBC Bank analyst Barnabas Gan.
Several voting Federal Reserve policymakers judged a rate hike would be warranted “relatively soon” if the U.S. economy continued to strengthen but doubts on inflation remained, according to the minutes of the Fed’s September policy meeting released on Wednesday.
Gan added that various headwinds to the global economy would buoy safe-haven demand for bullion, with the metal likely to touch $1,300 by year-end.
Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China’s September trade data showed a sharp decline in exports.
China’s September exports dropped 10 percent from a year earlier, far more than markets had expected, while imports unexpectedly shrank 1.9 percent after an encouraging bump up in August, official data showed on Thursday.
The dollar index, which measures the greenback against a basket of six major currencies, fell 0.1 percent to 97.879.
“There is a lot of buying on the physical side in Asia, mainly from China and buying from exchange traded funds after recent dips,” a precious metals trader with a China-based bank said.
Spot gold may break support at $1,250 per ounce and fall to its Oct. 7 low of $1,241.20, driven by a wave 5, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver gained 0.7 percent to $17.57 an ounce.
Platinum was up 0.6 percent at $947.60 an ounce, its biggest single day gain since Sept. 21.
Palladium slid 0.8 percent to $644.10 an ounce, after touching a low of $641.22, its weakest since July 19.