Gold lifts as dollar loses some value against China’s yuan

Bengaluru — Gold prices gained on Friday as the dollar eased against the yuan after promising China economic data boosted recovery hopes in the world’s top bullion consumer, although the possibility of further US interest rate hikes kept investors on edge.

Spot gold was up 0.3% at $1,915.09/oz by 3.20am GMT.

Bullion was still on track for a small weekly decline after dropping to near the $1,900 level, its lowest since August 23, on Thursday. US gold futures were up 0.2% to $1,936.70.

The yuan hit two-week highs against the dollar after data showed China factory output and retail sales in August beat forecasts in boost to recovery prospects. A softer dollar makes greenback-priced bullion more attractive for overseas buyers.

Data on Thursday showed US producer prices increased by the most in more than a year in August while retail sales also beat expectations, boosted by a surge in gasoline prices. This comes after US consumer prices in August increased by the most in 14 months, keeping bets alive for further rate hikes by the Federal Reserve after a likely pause next week.

“The outlook for rates to be kept high for longer has been keeping non-yielding gold prices under pressure,” said Yeap Jun Rong, a market strategist at IG.

“Given the still-resilient economic conditions in the US, it does not seem to warrant the need for rate cuts anytime soon, with the timeline for cuts constantly pushed back into mid next year.”

The European Central Bank also raised its key interest rate to a record high of 4% on Thursday, but signalled that the hike was likely to be its last. Higher rates to curb inflation tend to lower demand for bullion, which yields no interest.

Spot silver jumped 1% to $22.86/oz. Platinum gained 0.6% to $911.92 and palladium added 0.3% to $1,254.42, both looking poised for weekly gains.