Gold prices edged higher on Friday, heading for their biggest weekly percentage gain in nearly two years, buoyed by a weaker US dollar and as investors looked to hedge against inflation. Spot gold was up 0.4 percent at $1,358.40 an ounce as of 0801 GMT, after touching a three-week high of $1,360.
The metal is up more than 3 percent this week, set for its best weekly performance since the week ended April 29, 2016. US gold futures climbed 0.4 percent to $1,360.90 per ounce on Friday. Spot gold has gained 4 percent from a one-month low of $1,306.81 last week, mostly on a weaker dollar.
"Gold has risen this week mainly due to a weaker dollar and physical buying ahead of Chinese New Year," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services. "Also, the market is starting to fall in love with inflation trades again. Gold could be the standout performer this year if that's the case though some wearing off can come once the seasonal buying is done," Kumar said.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.29 percent to 821.30 tonnes on Thursday from Wednesday. "Technically, the January 2016 high was $1,365 and the 2016 high was $1,375 If gold can clear both those levels, there is lot of room above," Gupta of Adroit said.
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