Gold

Gold prices hovered near four-month highs on Wednesday as the U.S. dollar slipped against a basket of currencies. In see-saw trading, the dollar had risen early against the euro as the single currency backed away from a three-year high. But the greenback later slipped.

Spot gold was flat, last up 0.1 percent at $1,339.44 an ounce by 1858 GMT. It remained close to Monday's peak of $1,344.44, its highest since Sept. 8. "The euro is driving the dollar, which is then driving the gold now," said Michael Matousek, head trader at U.S. Global Investors in San Antonio. The price of gold has risen by 8 percent since mid-December, lifted as the dollar weakened to a three-year low against a basket of major currencies.

"For the moment it looks like gold appears intent on challenging the 2017 highs around $1,357," said Daniel Ghali, commodities strategist at TD Securities in Toronto. Longer-term, gold will be supported by risk that global share prices could fall from record highs and strong growth around the world could stoke inflation.

Concerns regarding (share price) overvaluations and the possibility of rising inflation have reignited interest in gold. Funds' bets on higher gold prices have surged, with their net long positions rising to almost 200,000 contracts from fewer than 80,000 in mid-December.

"The past three weeks have seen the fastest rise in speculative positioning in gold on record," Standard Chartered analysts said. But the net long was still only 36 percent of total open positions and could rise further, which would help to drive prices higher, they added.

Silver

Silver dipped 0.1 percent at $17.17 an ounce. Spot silver surged 1.4 percent to $17.20 last Friday. For the week, it slipped 0.1 percent, on track to post the first weekly loss in five weeks.

On weekly chart, silver diverged from gold under heavier correction pressure, and failed to cross over the resistance of upper band to form an upward path. The divergence, however, is expected to corrected in near term, as silver will move in line with gold eventually. The resistance can still be found at around the 100-day and 200-day moving average.

 
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                       Lv Yan