Gold set for weekly gain on U.S. Fed's rate-hike stance

Gold prices advanced on Friday and were poised for a weekly gain, as bullion drew support from the U.S. Federal Reserve`s decision to not rush to raise interest rates.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,795.64 per ounce, as of 0216 GMT, and set to mark its second weekly climb in three with a gain of 0.7%.

* U.S. gold futures rose 0.2% to $1,796.50.

* 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, prompting investors to call it a "dovish taper."

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

* Adding to gold`s support, benchmark U.S. 10-year Treasury yields pulled back from a one-week peak.

* The Bank of England kept interest rates on hold on Thursday, wrong-footing investors who had been convinced that it would be the first of the world`s big central banks to raise borrowing costs after the COVID-19 pandemic.

* The European Central Bank (ECB) is aware of people`s fears about high inflation but is very unlikely to raise interest rates next year, ECB board member Isabel Schnabel said on Thursday.

* The number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 20 months last week, suggesting the economy was regaining momentum.

* Japan’s household spending fell in September, heightening the risk that the world`s third-largest economy contracted last quarter.

* Spot silver rose 0.3% to $23.83 per ounce. Platinum gained 0.2% to $1,028.00, while palladium climbed 0.4% to $2,008.48.