Gold hit two-week highs on Friday and stayed on track for its biggest weekly jump since January, after the US Federal Reserve sounded a cautious note on interest rates, arresting a dollar rally. The US currency fell 1 percent on Friday, heading for its worst weekly performance against the euro in 18 months after the Fed downgraded its growth and inflation projections, signalling it is in no rush to push borrowing costs to more normal levels.
Spot gold was up 0.9 percent at $1,181.20 an ounce by 1456 GMT, off an earlier peak of $1,184.30, while US gold futures for April delivery were up $11.50 an ounce at $1,180.50. Spot prices have risen 2 percent this week, snapping two weeks of losses. Gold prices hit a four-month low earlier this week, having come under pressure from expectations that the US central bank is on track for its first interest rate increase in nearly a decade.
Such a move would boost the dollar and lift the opportunity cost of holding non-yielding bullion. The Fed, however, indicated it preferred a more gradual path.
"We obviously saw a slight change in sentiment earlier this week, with Janet Yellen apparently joining an ever-increasing number of central bank doves," Saxo Bank's head of commodity research Ole Hansen said, referring to the Fed chief.
"Rates are still expected to go higher, but bond markets reacted quite strongly.
"US bond yields have had a good negative correlation to gold since December so that is adding support. At the same time it looks like Greece could attract some attention again. I think we will settle into a $1,150 to $1,190 range for now." Post-Fed, the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, saw its first inflows since Feb. 20, also boosting sentiment.
In the physical markets, Chinese buying was steady, with premiums on the Shanghai Gold Exchange staying at a robust $6-$7 an ounce on Friday. Sustained physical buying could further support prices.
Silver outperformed other precious metals to rise 3.3 percent to $16.66 an ounce, while spot platinum was up 0.9 percent at $1,133.75 an ounce.
Platinum continued to trade at a roughly $50 discount to gold, a factor that is likely to stoke physical demand according to the Perth Mint, which is ramping up production of its platinum coins.
Palladium was up 1.1 percent at $775 an ounce, though it was the worst-performing precious metal of the week, down nearly 2 percent.
Comments
Comments are closed.