Gold inches back toward 17-month peak as dollar moves lower
NEW YORK/LONDON: Gold rose on Friday, climbing back toward the previous day’s 17-month peak as a report of slow economic growth pushed the US dollar lower, days after the greenback was hammered by a senior US official backing a weaker currency.
The dollar was on track for its biggest weekly decline since May. President Donald Trump’s comments on Thursday that he wanted a “strong dollar” failed to lend much support, a day after Treasury Secretary Steven Mnuchin said a weaker greenback would help short-term US trade balances.
Spot gold was up 0.3 per cent at US$1,351.86 by 1837GMT, up 1.5 per cent. On Thursday, bullion hit $1,366.07, its highest since August 2016.
US gold futures for February delivery settled down US$10.80, or 0.78 per cent, at US$1,352.10 per ounce.
“The dollar is weak, driving gold higher. Gold is still in an uptrend,” said Michael Matousek, head trader at US Global Investors in San Antonio.
Dollar weakness makes assets priced in the US unit less expensive for holders of other currencies. The US economy grew 2.6 per cent in the final quarter of 2017, slower than the three per cent forecast by economists polled by Reuters.
“GDP is light so there’s a question as to whether the Fed will do so many rate hikes throughout the year and that tends to drive gold higher,” Matousek added.
Higher yields on bonds make gold investment less attractive because gold pays no interest. World stocks were set for their 10th straight week of gains. Gold could benefit if that scorching run cools, Thomson Reuters GFMS analysts said, predicting volatility in equities and concerns over global politics could lead gold prices up past US$1,500 an ounce this year.
Among other precious metals, silver was up 0.7 per cent at US$17.42 an ounce.
On Thursday, silver touched $17.69, its highest in more than four months. It was strongest weekly rise among precious metals, up 2.4 per cent from last Friday’s close.
“The US dollar remains in the driving seat of the metal markets, causing a lot of volatility for silver,” Julius Baer said in a note.
“We remain neutral but lift our 12-month price target to US$17.50 per ounce due to signs of improving industrial demand.”
Platinum was up 0.4 per cent at US$1,014.40 an ounce, flat from last week. Palladium was down 0.7 per cent at US$1,088.47 an ounce.
After recently hitting record highs, palladium was on track for its second weekly loss. It hit a two-week low of US$1,080 per ounce. — Reuters