Gold rises, but on track for third straight weekly dip

Gold gained on Friday as the dollar and bond yields eased but remained on course for a third straight weekly dip as strong US economic data reinforced bets that the Federal Reserve will keep interest rates elevated.

Spot gold rose 0.3% to $1,894.41 per ounce by 1042 GMT, after touching its lowest in five months on Thursday. US gold futures rose 0.3% to $1,920.80.

The dollar was down 0.2%, making gold cheaper for holders of other currencies.

“Ultimately, the medium-term outlook for gold is set to be influenced by Powell’s highly anticipated speech at Jackson Hole. In the meantime, $1,900 remains a key level of interest,” said Lukman Otunuga, senior research analyst at FXTM.

“Sustained weakness below the $1,900 level may open a path towards $1,870.”

Minutes from the most recent Federal Reserve meeting showed most members continued to see “significant upside risks to inflation”. Traders expect the Fed to hold rates in the 5.25-5.5% range until 2024, according to CME’s Fedwatch tool.

Benchmark 10-year US Treasury yields eased from their highest levels since October, propping up zero-yielding bullion.

On Thursday, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, registered the biggest drop since July last year.

UBS cut its year-end target for gold from $2,100/oz to $1,950/oz, highlighting that the next boost in gold prices would require a renewal of ETF demand, expecting gold to remain rangebound until such a time.

However, the Swiss bank forecast central bank gold buying to remain strong for the rest of the year, having picked up in June after three months of net selling.

Spot silver rose 0.6% to $22.82 per ounce. Platinum jumped 1.4% to $902.29 while palladium rose 0.6% to $1,224.83, though both were set for weekly declines.

Reuters