Gold on track for weekly gain as dollar loses ground

Bengaluru — Gold rose on Friday supported by a dip in the dollar and was set for eking out small weekly gains, though persistent jitters over the US Federal Reserve continuing on an aggressive interest rate-hike path weighed on sentiment.

Spot gold rose 0.7% to $1,719.65/oz up to 4.07am GMT. Prices were up 0.5% for the week, after three straight weekly declines. US gold futures were up 0.6% to $1,730.90. The dollar index was down 0.7%, after touching a one-week low, making the greenback-priced bullion less expensive for holders of other currencies.

“At present levels, gold appears in the short term to have bottomed out,” said Michael Langford, director at corporate advisory firm AirGuide. “Ongoing jobless claims and employment numbers will materially influence the central bank’s views of the strength of the underlying economy.”

Data on Thursday showed claims for unemployment benefits fell last week in the US, highlighting the robustness of the labour market and bolstered expectations of the Fed’s aggressive rate hikes.

The Fed is “strongly committed” to fighting inflation and remains hopeful that can be done without the “very high social costs” involved in prior campaigns to control surging prices, Fed chair Jerome Powell said.

The US central bank is expected to raise the rate by another 75 basis points on September 21.

“Gold has been essentially oscillating between about $1,685-$1,680 and $1,725-$1,720 digestive range,” said DailyFX currency strategist Ilya Spivak.

Higher interest rates increase the opportunity cost of holding non-yielding bullion and boosts the dollar.

The European Central Bank raised its key rates by an unprecedented 75 basis points on Thursday.

Spot silver gained 1.4% to $18.8206/oz and was up 4.5% for the week. Platinum rose 0.4% to $882.62 and was headed for its biggest weekly gain since June. Palladium fell 1.5% to $2,106.41/oz, but was set for its first weekly rise in four.