Gold grain at a refinery in Russia. Picture: BLOOMBERG/ANDREY RUDAKOV
Gold grain at a refinery in Russia. Picture: BLOOMBERG/ANDREY RUDAKOV

Bengaluru — Gold prices were on track for a weekly gain on Friday, supported by the US Federal Reserve’s decision to not rush into raising interest rates, which also weakened bond yields.

Spot gold rose 0.1% to $1,793.63/oz by 4.19am GMT, and was up 0.7% so far in the week. US gold futures gained 0.1% to $1,794.40/oz.

The Fed said on Wednesday it will begin paring its monthly bond purchases with plans to end them in 2022, but stuck to its long-held view that high inflation would prove “transitory” and likely not require a fast rise in interest rates.

The announcement prompted benchmark 10-year US Treasury yields to pull back from recent highs of about 1.6%.

Given the Fed’s view and ongoing inflationary pressures, gold should find some support at current levels, ANZ analysts said in a note.

“Still, we expect prices to retreat in 2022 as economic recovery develops,” they said.

The Bank of England also kept interest rates on hold on Thursday, wrong-footing investors who had been convinced it would raise borrowing costs.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

“A lot of investors’ interest is still mainly in equity markets and until gold breaks above $1,835, it might not have enough momentum to attract strong interest,” said Nicholas Frappell, global GM at ABC Bullion.

MSCI’s gauge of stocks across the world hit a new all-time high on Friday.

Investors now eye US nonfarm payrolls data due later on Friday to gauge the health of the labour market and how that might influence the Fed’s outlook on rates.

Spot silver rose 0.2% to $23.82/oz and platinum gained 0.4% to $1,029.70/oz.

Palladium climbed 1.5% to $2,030.65/oz and was on course for its first weekly gain in four.

Reuters

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