Gold prices climbed more than 1% on
Friday to an over one-week high, as a weaker dollar boosted
demand for the yellow metal, even as US Federal Reserve
policymakers vowed to raise interest rates to tame inflation
Spot gold was up 0.7% at $1,719.89 per ounce by 1230
GMT after rising to its highest since Aug. 30 at $1,729.29
earlier in the session.
Bullion, up 0.5% so far this week, was heading for its first
weekly gain in four.
US gold futures rose 0.6% to $1,730.90.
“The US dollar index dropping back to a one-week low has
boosted the price of gold, and there may well be further
strength into the inflation report and perhaps even beyond
that,” David Jones, chief market strategist at Capital.com said.
The dollar dropped over 1%, making greenback-priced
bullion less expensive for overseas buyers, while the benchmark
10-year US Treasury yields also pulled back from recent highs.
Investor focus now shifts to August US consumer price
index report due next week after recent hawkish comments from
Fed Chair Jerome Powell cemented bets of a large interest rate
hike to fight inflation.
Meanwhile, the European Central Bank raised its key interest
rates by an unprecedented 75 basis points on Thursday and
promised further hikes.
Higher interest rates increase the opportunity cost of
holding non-yielding bullion.
The gold market continues to see a slow and steady reduction
of exchange-traded funds (ETFs) and trading volumes on US
futures markets continue to weaken, suggesting that the move
higher is unlikely to be sustained, said independent analyst
Elsewhere, spot silver added 0.4% to $18.6357 per
ounce and was set for a weekly gain.
Palladium rose 0.9% to $2,157.79 and was headed for
its best week since July.
Platinum edged 0.1% lower to $878.54, but was on
track for its biggest weekly gain since early June.
In the physical gold market, demand in some Asian hubs
remained firm this week as lower prices lured buyers.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Krishna
Chandra Eluri and Maju Samuel)