Gold heads for biggest gain in five weeks
London — Gold rose on Friday and was on track for its best week in five as the dollar softened on political turbulence in the US, boosting bullion’s safe-haven appeal. Spot gold was up 0.5% at $1,253.31 per ounce, as at 1.58pm GMT, putting it up 1.9% for the week. US gold futures slipped 0.1% to $1,251.60 an ounce.
"We have political turmoil in the US which has driven the dollar lower [while] this week’s sentiment has supported gold," Danske Bank analysts Jens Pedersen said, adding that it was unclear whether bullion would hold on to the gains into next week.
Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty, gaining alongside bond yields and the yen while stocks usually take a hit.
Last week, US President Donald Trump fired FBI director James Comey, triggering a political firestorm which culminated on Wednesday in the justice department’s appointment of a special counsel to probe possible ties between Russia and Trump’s 2016 presidential campaign. "Political risk is back on again after market participants became overly complacent following the outcome of the French elections," Commerzbank analyst Carsten Fritsch said.
"Risk sentiment took a major hit," he said.
The dollar index, which measures the greenback against a basket of six major currencies, was headed for its worst week in nine months while world stocks were set for the first weekly fall in five. New applications for US jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-and-a-half-year low, pointing to rapidly shrinking labour market slack.
"Safe-haven buying has provided strong support to gold prices over the past six months," ANZ said in a note. "However, rising geopolitical risks in the US and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the US next month." Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14% to 850.71 tonnes on Thursday.
Among other precious metals, palladium gained 0.3% to $765.85 per ounce. The metal slipped 5% this week and was poised for its biggest weekly fall since late January.
Platinum rose 0.6% to $937.13 an ounce while silver climbed 1.5% to $16.78 an ounce. Both metals were headed for their strongest week since mid-April.