US gold ends near week high

US gold futures settled on Friday near a one-week peak, driven up by suggestions inflation was on the rise after a jump in US consumer price data and an oil surge to a 10-month high, traders said.
"The CPI that came out today, the focus was on the core, which was a little deceptive, because you take out food and energy, yet those areas are certainly under price pressures," said Paul McLeod, CommerzBank vice president, precious metals.
He said the surge in the headline price gauge, with a tame core reading, muddied the water as to what Federal Reserve policy makers might do at their next board meeting. "We certainly don't expect them to lower interest rates. We think the next move is likely higher, but not at the next meeting," McLeod said.
Most-active gold futures for August on the Comex division of the New York Mercantile Exchange finished $2.80 higher at $658.70 an ounce, in a tight but higher range between $654.00 to $659.50 an ounce.
Gold steadied at higher levels after tossing around on a raft of US economic data released on Friday, giving conflicting readings on the inflationary outlook, traders said.
But the rise in food and energy costs that pushed overall US consumer prices up 0.7 percent in May, its sharpest gain in more than 1-1/2 years, held the most sway for gold buyers. "The core is fine, and that is what matters. I am more and more concerned about the overall number, which was pretty grim, as was the PPI yesterday.
Somewhere along the line someone has got to think about that," said Robert Macintosh, chief economist at Eatoon Vance Management in Boston The higher oil prices added to inflationary concerns. Oil prices hit a 10-month high on Friday, its third straight day of steep gains, sparked by worries of low fuel supplies from US refineries running below capacity and an upsurge of violence in the Middle East.
"Oil's gains definitely helped too. Gold's not walking step-for-step like it had been, but oil certainly adds to the argument for a higher inflation scenario," said McLeod.
With a slew of gold investors holding short positions, prices nudge up on any bullish news. As players cover those short gold positions, traders said this week's trading shows a sideways pattern building with an upward bias.
"We have continued to see good fundamental activity with good physical offtake. Though not a lot of volume today there was definitely a bid tone to the day.," said one trader. After a two-month downtrend, the $647 to $650 an ounce zone held all week on August gold futures. Comex estimated final volume at 56,451 lots, compared with turnover of 65,264 lots on Thursday.
The exchange set on Thursday's options turnover at 2,835 lots. Spot gold rallied in late on Friday trade to $654.50/6.0 an ounce, up from $651.20/2.70 late on Thursday.
It reached a one-week peak at $659.50. London banks set the afternoon gold fix at $653.10. Comex July silver added 9.50 cents to end at $13.26 an ounce. The range spanned from $13.0650 to $13.27 an ounce. Spot silver was quoted at $13.21/3.25 an ounce by late on Friday, up from $13.13/3.17 an ounce late on Thursday.
London silver was fixed at $13.06 an ounce. Nymex July platinum closed $1.0 lower at $1,286.00 an ounce. Spot platinum was seen at $1,278/1,282. September palladium was up $2.0 to close at $373.50 an ounce. Spot palladium was quoted at $368.0/372.0.