Picture: ISTOCK
Picture: ISTOCK

Bengaluru — Gold fell on Friday after hitting a seven-week high in the previous session as the dollar edged up and a technical correction set in, but the yellow metal was still on track to end higher for a third consecutive week.

Spot gold fell 0.4% to $1,191.39/oz by 2.56am GMT. Bullion on Thursday touched a high of $1,206.98, its best since November 23. US gold futures fell 0.7% to $1,191.50/oz.

"Currently we see that gold is overbought and needs some technical correction," said Jiang Shu, chief analyst at Shandong Gold Group.

The medium term for gold prices was fairly positive, he said, until the expectation for a US interest rate hike in March kicked in. "For a short term, prices may fall towards $1,170, and then climb up above $1,210 and with the approach of the US Federal Reserve’s March conference, prices may go down again."

Spot gold faced a strong resistance zone of $1,205/oz-$1,210/oz, and could retrace steps back towards support at $1,172, said Reuters technical analyst Wang Tao. The dollar index, which measures the greenback against a basket of currencies, rose 0.2% to 101.580.

Federal Reserve chairwoman Janet Yellen did not comment on the outlook for the US economy or monetary policy in remarks to teachers, saying improving US education could help raise living standards.

Several Fed officials on Thursday cautioned that the fiscal and tax plans sketched out by the incoming Trump administration could spur a short-term economic boost that would result in longer-run inflation and debt problems.

In an array of appearances Fed regional bank presidents agreed in principle that the policies likely to be pursued by president-elect Donald Trump will raise economic growth — through direct spending, the consumption and investment spurred by tax cuts, and the boost to business from lighter regulation.

Trump’s campaign calls for tax cuts and more infrastructure spending have boosted US shares and the dollar, as well as driving a sell-off in treasuries, but his protectionist statements and a flurry of off-the-cuff posts on Twitter have kept many investors from adding to risky positions.

The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a tightening labour market that is starting to spur faster wage growth.

Among other precious metals, spot silver fell 0.4% at $16.70, after hitting a near one-month high of $16.92 in the previous session.

Platinum fell 0.6% to $966.50. It touched a two-month high of $990.10 in the previous session.

Palladium fell 0.8% to $750.50.

Reuters

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