Gold heads for first weekly gain
london — Gold rose on Friday and was on course for its first weekly gain since February as the dollar hit a fiveweek low following the Federal Reserve’s cautious message on interest rates, making bullion cheaper for holders of non-US currencies.
The Fed raised US rates on Wednesday as expected, but left its earlier forecast of three rate increases this year unchanged, disappointing some investors who had hoped for hints of a possible fourth hike in 2017. Spot gold was up 0.2 per cent at $1,228.96 an ounce at 1053GMT, taking its gains this week to two per cent. On Thursday the metal hit $1,233.13, its highest since March 6. US gold futures were up 0.1 per cent at $1,228.7.
“What’s happening now is just an inverse trade against the dollar,” said Jiang Shu, chief analyst at Shandong Gold Group.
US President Donald Trump’s failure so far to push through promised economic stimulus measures may have influenced the Fed, Tom Kendall at ICBC Standard Bank said.
“If infrastructure spending and tax cuts are being pushed further and further out, it gives the Fed more reason to be cautious. That is a bit of a vacuum that gold can rally into,” he said.
Failure to deliver swift tax cuts and regulatory reform could puncture a rally in US stocks, said Edward Meir at INTL FCStone.
“Any retracement in stocks could help gold build on its recent move,” he said in a note. —