Gold held near its highest in more than a year on Friday as the US dollar dropped and weak economic data lowered expectations of a December interest rate rise in the United States. The US dollar hit a more than 2-1/2-year low against a basket of major rivals on reduced expectations for another Federal Reserve rate increase this year, while the euro hit multi-year highs after European Central Bank President Mario Draghi suggested that the ECB might begin tapering its massive stimulus program this fall.
Spot gold was down 0.1 percent at $1,347.8 by 3:43 pm EDT (1943 GMT) after hitting $1,357.54, its highest since August 2016. It was up 1.7 percent this week, notching a third consecutive weekly gain. US gold futures for December delivery settled at $1,351.2. Julius Baer analyst Carsten Menke pinned the rise to the weak dollar and hopes that interest rate rises would be delayed.
Demand for gold as a safe haven investment was strong as South Korea braced for a possible further missile test by North Korea when it marks its founding anniversary on Saturday. But high prices have weakened demand for physical gold in top consumer Asia. "By its own account, the Chinese central bank (PBoC) bought no gold in August, either," Commerzbank said in a note.
Technical resistance was at $1,353, gold's peak last September, but upward momentum could lift it to the 2016 high of $1,375, ScotiaMocatta analysts said. In other precious metals, silver was down 0.3 percent at $18.01 an ounce after touching $18.21, its best since April. It rose about 2 percent on the week. Palladium was 2.1 percent lower at $934.78 an ounce and fell more than 4 percent on the week, the first decline in seven weeks.
The metal used in catalytic converters that curb pollution from vehicle exhausts is trading near its highest since 2001. But car output in China and the United States is falling and shortages of metal are unlikely, said Capital Economics analyst Simona Gambarini in a note. Platinum was down 0.7 percent at $1,008.40 after touching touched $1,022.70, its highest since March.