Gold hits three-week high as dollar slides to lowest since 2014
Data this week showed US producer prices accelerated in January, while initial claims for state unemployment benefits increased in the week ended February 10.
Gold rose to a three-week high on Friday as the dollar index slid to a three-year low and stronger-than-expected inflation data this week boosted interest in the metal as a hedge against price pressures.
Gold is holding on track for its biggest weekly gain in nearly two years, snapping two straight weeks of losses that pulled it back from last month`s 1-1/2 year peak.
Spot gold was up 0.4 percent at $1,358.83 an ounce at 1030 GMT, while U.S. gold futures for April delivery were up $6.40 an ounce at $1,361.70.
"We`re looking for the dollar to keep weakening. For me that`s the key thing to watch for gold," Oxford Economics` director of commodity services Daniel Smith said. "Gold tends to do particularly well in that kind of environment."
Signs of rising inflation were also helping drive the metal higher, he said. "If inflation expectations rise faster than nominal rate expectations, then this should add fuel to the fire, particularly in an environment of U.S. dollar weakness."
Spot gold has risen 3.2 percent so far this week, putting it on track for its biggest weekly rise since April 2016. Gold has fared less well in other currencies, rising 1 percent in euro terms and 1.5 percent in sterling.
The dollar hit a three-year low versus a currency basket on Friday, hurt by concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries consider tighter monetary policy.
Data this week showed U.S. producer prices accelerated in January, while initial claims for state unemployment benefits increased in the week ended Feb. 10.
"Rising inflation, coupled with slightly weaker U.S. growth readings and a struggling dollar should continue to provide gold with an element of support," INTL FCStone said in a note.
On the physical side of the market, demand in Asia was muted by the Lunar New Year holiday, closing markets in major consumer China, as well as in South Korea, Malaysia and Vietnam.
In India, physical gold was sold at a discount for the first time in three weeks as demand slumped due to a jump in local rates. Gold in rupee terms hit a 15-month high of 30,836 rupees on Friday.
Among other precious metals, silver was up 0.1 percent at $16.89. Platinum was 0.8 percent higher at $1,009, after hitting its highest since Jan. 29 at $1,012.70.
Palladium was up 0.8 percent at $1,025.55. The metal has risen 5.3 percent so far this week, its best since October.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
05:00 PM IST