Gold hovers near three-week high as investors worry about inflation
NEW YORK/LONDON — Gold prices dipped on Friday, but still hovered near a three-week high, as the US dollar index bounced from a three-year low and investors worried that US inflation could heat up.
The US dollar limped up off a three-year low against a basket of currencies but still was headed for its biggest weekly loss in nine months as negative sentiment offset any support from rising Treasury yields.
Spot gold was 0.30% lower at $1,348.58 per ounce by 2:21 p.m. EST (19:21 GMT), off a three-week peak of $1,361.76 in early trade. US April gold futures settled up $ 0.9, or 0.10%, at $ 1,356.20 per ounce.
“Gold is down on the stronger dollar today,” Michael Ellingston trader at US Global Investors in San Antonio. “The dollar broke through its earlier highs and rose more.”
Gold was little changed for much of the session, but the rising dollar caused some consolidation, said David Meger, director of metals trading at High Ridge Futures.
“But there are still some inflationary concerns in the market. The overall trend in the dollar remains to the downside even though we are rebounding today,” Mr. Meger said.
Fear that weakness could return to equities is also sparking safe- haven demand of gold, he added.
While gold prices have surged in dollar terms, gold has fared less well in other currencies, up by 1% when priced in euros and 1.4% in sterling.
The dollar has been reeling, with investors wary that Washington might pursue a weakdollar strategy. Other countries are considering tighter monetary policy, which could erode the yield advantage of US fixed- income assets.
On the physical side of the gold market, demand in Asia was muted by the Lunar New Year holiday. In India, physical gold sold at a discount for the first time in three weeks as demand slumped.
Among other precious metals, silver was down 1.3% at $ 16.66 per ounce, platinum gained 0.20% at $1,003.24 an ounce, after hitting its highest since Jan. 29 at $1,012.70. Palladium was up 2.3% at $1,040.97 an ounce. It had risen 6.8% last week, its biggest weekly increase since October. —