Gold firmed on Friday as the dollar retreated from highs but bullion was still en route to a weekly fall as traders looked beyond a widely expected pause by the Federal Reserve this month to focus on persistently resilient US data.
Spot gold was up 0.3% to $1,924.98/oz by 3.45am GMT, but set for a 0.7% weekly fall. US gold futures rose 0.3% to $1,949.00.
“Market participants are looking for other asset classes that can give them higher returns. That, at this moment, seems like the dollar,” said Brian Lan of Singapore dealer GoldSilver Central.
The dollar eased 0.2% on the day but was still headed for its longest weekly winning streak in nine years, bolstered by a slew of resilient US economic data that has also put to question the end of the Federal Reserve’s rate-hike cycle.
Data this week showed the US services sector gained steam in August, while jobless claims fell unexpectedly last week to the lowest level since February, indicating a still-tight job market.
Markets priced in a 93% chance of the Fed keeping rates unchanged at its September 19-20 meeting, but bet on 41% odds of one more hike before 2024, according to the CME FedWatch tool.
Higher interest rates boost returns on competing safe-haven Treasury bonds, which are set for their first weekly rise in three, making non-interest-bearing gold less attractive.
Three Fed officials speaking on Thursday suggested that the Fed could skip a rate hike in September, but maintained that there was more work to be done to rein in inflation.
Silver rose 0.6% to $23.08/oz and platinum gained 0.2% to $905.34. However, both were set for their worst weeks since June 23.
Palladium was up 0.6% to $1,218.77.