Gold prices recovered from a nearly seven-month low on Tuesday as the dollar eased
with spot gold up 0.69 percent at $1,250.16 an ounce, Reuters reported.
"The trend of the dollar is bearish for gold but as we start the new quarter we are seeing some dollar profit-taking and that is boosting gold," Forex.com analyst Fawad Razaqzada told the news agency.
However, analysts warned that the increase in gold on Tuesday did not mark the end of its recent downward trend.
"It appears quite clear that the trend is still bearish for gold and that a first positive impulse could only arrive if prices soar to $1,255," Reuters quoted ActivTrades analyst Carlo Alberto De Casa as saying.
However, the Bank of America Merrill Lynch (BAML) has reiterated their forecast for gold prices to average the fourth quarter of 2018 around $1,400 an ounce despite a stronger U.S. dollar.
The second largest bank in America said in its report published Monday that growing geopolitical tensions, escalating trade wars and rising inflation pressures will remain supportive of the precious metals.
‘We note that the business cycle is maturing and the ongoing uncertainty around trade is not helping at this junction,’ the BAML analysts said. “At the same time, inflation has been picking up a combination which may ultimately bring gold buyers back into the market.
The Bloomberg Contributor Composite, which averages all gold price forecasts submitted to the organization, predicts the yellow metal will average $1,358 in the last quarter of the year while Thomson Reuters GFMS recently predicted the price of the yellow metal could reach $1,500 in late 2018.
A country betting on physical gold is Switzerland. Last month, the wealthy Alpine nation bought gold bars worth 700 million CHF for its government pension fund (AHV/AVS), switching from the paper-backed securities in US dollars.