US gold rallied to a 2-week peak on Friday following a benign reading of a key inflation gauge that undermined the dollar's early advance, traders said. With the Federal Reserve expressing concern earlier this week in its policy meeting minutes about greater risk of inflation than slowing US growth, some analysts said any inflation reading is being gleaned by gold investors.
Gold was lifted by "Inflation concerns and a little bit of chart buying, but caution should be heeded," said George Nickas, precious metals analyst at FC Stone. Most-active August gold on the COMEX division of the New York Mercantile Exchange rose $6.60 to $673.30 an ounce, in a range that extended up to a $675 high dating back to May 16.
COMEX estimated 1000 am EDT gold volume at 58,514 lots. The options count was 6,937 lots. Traders said there was little reaction to the US employment report for May, which was mostly in line with expectations. But, a tame consumer price measure contained in the April US personal spending report gave investors reason to think the Fed may not need to raise US interest rates any time soon, briefly knocking the dollar down against the euro.
He added, however, some sellers may be tempted by the end of the week to grab quick profits after gold's $16 rally in just the last 2 days. "A closing over today's high at $675 (an ounce on August gold futures) would bring in another wave of buying, but it's Friday and people may sell to take profit ahead of the weekend," the trader said.
"In a four-day work-week, I'd think the temptation would be take a little bit of profit after the morning buying was satisfied," he added. Spot gold rose to $668.25/8.75 an ounce, up from $659.80/61.30 an ounce in late Thursday dealings. London gold was set at $666.50 an ounce in the afternoon fix. Silver continues to gain with other industrial metals and also on strong technical buy signals, analysts said.
COMEX July silver rallied 16.0 cents to $13.63 an ounce, after soaring to $13.6750 a high dating back to May 7. Spot silver was quoted higher at $13.58/3.61 an ounce, up from $13.42/13/45 at the end on Thursday. The London silver fix jumped to $13.53 an ounce. July platinum was up $11.20 at $1,297.0 an ounce. Spot platinum rose to $1,288/1,293. September palladium rose $3.35 to $376.60 an ounce. Spot palladium was quoted at $369/373.