Gold firm as US political concerns lend support
LONDON: Gold rose on Friday and was set to end the week slightly higher as the sudden sacking of the FBI head in the US stoked investor concerns and boosted demand for bullion, even as the dollar headed for its strongest week this year.
Spot gold was up 0.4 percent at $1,227.21 per ounce by 1204 GMT.
Gold rose 0.5 percent in the previous session, its biggest oneday gain in a month.
US gold futures added 0.3 percent to $ 1,227.90 an ounce. “You continue to see the political uncertainty continue to support gold,” said ETF Securities analyst Martin Arnold, naming the dismissal of the FBI’s James Comey and the upcoming British election as sources of uncertainty.
US President Donald Trump on Thursday ran into resistance for calling ousted Federal Bureau of Investigation (FBI) chief Comey a “showboat.”
The attack was swiftly rebuffed by top US senators and acting FBI DirectorDi t Ad Andrew MCb McCabe, who pledged that an investigation into possible Trump campaign ties to Russia would proceed.
McCabeMCb said id thereth was alsol support from concerns that the equity valuations, which over the last few months were boosted by promises of more spending by theth TrumpT administration,d i it ti could ld run out of steam due to “policy paralysis.”
But capping gains in gold are expectations that the US Federal Reserve will increase rates in June.
New applications for US jobless benefits unexpectedly fell last week, while producer prices rebounded strongly in April, pointing to a tightening labor market and rising inflation that could spur the Fed to raise interest rates.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.
The dollar softened on Friday but was headed for its best week of the year while global stocks eased from near record highs. Traders are expecting a 100 percent probability of an interest rate increase in June, CME Group’s FedWatch showed.
“We get a host of Chinese macro releases out over the weekend, providing the commodity group with more direction heading into next week as well,” INTL FCStone analyst Edward Meir said. interest