Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria. Picture: REUTERS/LEONHARD FOEGER
Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria. Picture: REUTERS/LEONHARD FOEGER

London/Bengaluru — Gold was on track for its first weekly rise in five weeks on Friday ahead of US inflation data later in the day that could give clues on the pace of US interest rate rises.

Bullion bumped up against strong technical resistance after the dollar and US bond yields fell this week, helping the metal rise to its highest since September 26. "We’ve had a good run, and traders are happy to book some profits ahead of $1,300 considering the strong level of resistance," Saxo Bank analyst Ole Hansen said.

Spot gold was flat at $1,293.81 an ounce at 10am GMT after touching a high of $1,298.32. It was set for a weekly gain of 1.5%. Fibonacci resistance and the 50-day moving average came in at around $1,298.

"A close above the psychological $1,300 level would be required for the yellow metal to make a push higher," MKS PAMP trader Tim Brown said in a note.

US gold futures for December delivery were flat at $1,296 an ounce.

US consumer price inflation data was due at 12.30pm GMT, with a strong reading likely to increase the chance that the US Federal Reserve will raise interest rates again this year.

Gold is sensitive to rising rates because they push bond yields higher, reducing the attractiveness of non-yielding bullion, and tend to boost the dollar, making gold more expensive for holders of other currencies.

Minutes from the last US Federal Reserve meeting released this week showed policy makers remained divided on US inflation prospects. However, markets were still pricing in an 87% chance of a December rate hike, according to CME Group’s FedWatch tool.

Elsewhere, European Central Bank president Mario Draghi, on Thursday, defended a pledge to keep interest rates at rock bottom and the Bank of Japan’s Haruhiko Kuroda stressed resolve to maintain ultra-loose monetary policy.

A speech by US President Donald Trump at 4.45pm GMT outlining a tougher strategy on Iran will add to worries over North Korea and political chaos in Washington and increase demand for gold as a safe haven, Saxo Bank’s Hansen said. "We have Donald Trump in the White House picking a fight with everyone, which is providing some underlying support for gold," he said.

Silver was up 0.4% at $17.24 an ounce after hitting a three-week high of $17.32. Platinum was down 0.2% at $931.50 an ounce and palladium was 0.6% higher at $978.50.


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