Gold on track to end week higher after dollar slips

Bengaluru — Gold rose on Friday, pulling further away from the four-month low it hit earlier this week as the dollar and US treasury yields dipped ahead of US growth data, putting bullion on track for its first weekly gain in five.

Spot gold was up 0.4% at $1,281.67 per ounce at 9.48am GMT, after earlier hitting its highest since April 16 at $1,282.98.

The metal, which reached its lowest since late December on Tuesday at $1,265.90, is up 0.5% so far this week, and is poised for its weekly first gain since the week ended March 22.

US gold futures edged up 0.3% to $1,283.40.

The dollar retreated from 23-month highs ahead of the first-quarter GDP data due later in the day, while global shares eyed a fifth-straight weekly gain despite subdued trade.

“The moves in the forex market are favourable for the precious metals in general, with the euro firmer against the US dollar and a slightly lower dollar index,” Quantitative Commodity Research analyst Peter Fertig said.

“In addition, declining longer-term bond yields in the eurozone and the US are also supporting [precious] as the opportunity cost of holding gold is declining,” Fertig said.

Even strong data out of US was unlikely to change the US Federal Reserve’s monetary strategy, he added.

According a Reuters poll, major central banks are done tightening policy as the global growth outlook has softened across developed and emerging economies, with scant prospects for a surge in inflation.

The view is supported by a recent slashing of its growth outlook by the Bank of Canada and a disclosure from the Bank of Japan that it will keep interest rates super-low for at least one more year.

“Despite a significant drop in long-term real rates, gold prices have remained flat year-to-date as recession fears have receded since late last year,” Goldman Sachs said in a note.

Central bank gold purchases have been running strong in 2019, which could support prices, the bank said.

While gold has fallen nearly 5% from a peak in February, bullion’s recovery from this week’s four-month low is painting a neutral picture in technical charts.

Gold looks neutral in a $1,274-$1,284 range, and an escape could suggest a direction, said Reuters technical analyst Wang Tao.

Among other precious metals, silver was up 0.5% at $15.01 per ounce and has gained 0.5% so far this week.

Platinum rose 0.8% to $890, while palladium was down 0.2% at $1,412.41 per ounce, on track for its first weekly drop in three. 

Reuters