Gold Hits Over-Week High as Dollar Slips, Boosting Demand

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The price of gold soared more than 1% on Friday to a more than week-long high as a weaker dollar boosted demand for the yellow metal, even as U.S. Federal Reserve policymakers pledged to raise interest rates to control inflationary pressures.

Spot gold rose 0.7% to $1,719.89 an ounce at 12:30 GMT after hitting its highest level since August 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 drop in the US dollar index to a one-week low has pushed the price of gold higher, and there may well be more strength in the inflation report and maybe even beyond,” said David Jones, chief market strategist at Capital.com.

The dollar fell more than 1%, making dollar-priced bullion cheaper for overseas buyers, while benchmark 10-year US Treasury yields also retreated from recent highs. [USD/] [US/]

Investors’ attention is now turning to August’s U.S. consumer price index report due next week after recent hawkish comments from Fed Chairman Jerome Powell cemented bets of a sharp rise in interest rates to fight inflation.

Meanwhile, the European Central Bank raised key rates by an unprecedented 75 basis points on Thursday and promised further hikes.

Higher interest rates increase the opportunity cost of holding non-performing bullion.

The gold market continues to see a slow and steady reduction in exchange-traded funds (ETFs) and trading volumes in U.S. futures markets continue to weaken, suggesting the upside is unlikely to continue , said independent analyst Ross Norman. [GOL/ETF]

Elsewhere, spot silver added 0.4% to $18.6357 an ounce and was forecast for a weekly gain.

Palladium rose 0.9% to $2,157.79 and was heading for its best week since July.

Platinum edged down 0.1% to $878.54 but was on course 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 attracted buyers. [GOL/AS]

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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