DOLLAR WEIGHS ON GOLD PRICE

GOLD PRICES slipped on Friday, hurt by a resilient dollar as some investors bet that recent spikes in US consumer prices were temporary.

Spot gold had fallen 0.9 percent to $1 881.80 (about R25 691) an ounce by 4.07pm. It was at $1 878.54 by 6.10pm. US gold futures were down 0.7 percent at $1 883.30.

The dollar index rose 0.4 percent, reducing gold’s appeal to investors holding other currencies.

TD Securities commodity strategist Daniel Ghali noted US employment and CPI data had failed to spur gold above $1 900, suggesting inflation hedging flows were slowing at the same time as physical flows were weakening.

“As a result a pullback in gold should unfold,” he said.

Gold is seen as a hedge against inflation. While a near-term pullback to about $1 850 could be on the cards, gold prices in the medium term should be supported by dovish central bank policies for a prolonged period of time, Ghali said.

Data on Thursday showed US consumer prices rose sharply in May, but analysts say the spike is likely “transitory” and therefore fears over the Federal Reserve policy tightening have ebbed.

On the Physical front, gold demand crept up this week in top hubs India and China although dealers were still forced to offer discounts.

“With next week’s FOMC (Federal Open Market Committee) unlikely to trigger any increased taper focus, the attention will instead turn to Jackson Hole in late August for any announcement about a change in direction,” said Ole Hansen, from Saxo Bank in a note, referring to the annual central banking conference.

Palladium advanced 0.8 percent to $2 798.92 an ounce and platinum increased by 0.1 percent to $1 151.52. Silver was up 0.6 percent at $28.14.