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Gold claws back momentum as U.S. dollar takes breather


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Gold prices rose more than 1% on Friday as a slight pullback in the dollar helped alleviate some pressure from the U.S. Federal Reserve’s hawkish policy narrative.

Spot gold was up 1.1% at $1,647.19 per ounce, as of 0618 GMT.

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U.S. gold futures rose 1.2% to $1,649.90.

Making gold more appealing for other currency holders, the dollar index was down 0.4%. But the unit was poised for its biggest weekly gain in more than a month.

“Gold prices have been keen to test the downside of late, but it is showing signs of beginning to stabilize. However, we are certainly not out of the woods yet,” said Clifford Bennett, chief economist at ACY Securities.

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The Fed raised interest rates by 75 basis points on Wednesday and Chair Jerome Powell pledged to “keep at” their battle to beat down inflation.

Spot gold may bounce to $1,648 per ounce, as it has broken a resistance at $1,632, according to Reuters technical analyst Wang Tao.

Gold is considered an inflation hedge, but high interest rates dent the non-yielding asset’s appeal.

“Interest rates are likely to stay elevated, but slowing pace of hikes could see the pace of decline in gold prices moderate. We do not rule out the risk to the downside but largely expect gold prices to consolidate or even stage a mild recovery,” said Christopher Wong, OCBC FX strategist.

Investors’ focus now shifts to the U.S. non-farm payrolls data, due at 1230 GMT, which could offer further cues on the Fed’s rate-hike stance.

On payrolls, an upside surprise to data would reinforce Fed’s higher terminal rate posture and keep gold undermined but if we do get a deceleration in job gains, gold may find support, said Wong.

Spot silver rose 1.4% to $19.74. Platinum was up 0.8% at $926.10 and palladium gained 1.4% to $1,825.87. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Uttaresh.V and Sherry Jacob-Phillips)


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