Gold prices steadied on Friday, en route to a weekly gain, buoyed by the dollar’s retreat on a perceived dovish tilt in the U.S. Federal Reserve’s interest rate hike strategy.
Spot gold was little changed at $1,755.13 per ounce by 0633 GMT, having risen 0.4% so far this week. U.S. gold futures advanced 0.5% to $1,755.00.
Silver shed 0.8% to $21.34, but was up about 2.2% for the week.
The dollar’s retracement has kept gold well-supported as “the slower pace of rate outlook is being looked upon as a sign of peak hawkishness to further unwind the bearish positioning in the yellow metal built up since the start of the year,” said IG market strategist Yeap Jun Rong.
A “substantial majority” of Fed policymakers agreed it would “likely soon be appropriate” to slow the pace of rate hikes, the readout of the Nov. 1-2 meeting showed on Wednesday.
This pressured the dollar, making gold cheaper for overseas buyers.
Gold could bounce to $1,790-1820 by December-end, led by safe-haven demand and the dollar’s weakness amid a dovish Fed, said Jigar Trivedi, analyst with Mumbai-based Reliance Securities.
A majority of traders expect a 50 bps rate increase at the Fed’s December meeting.
But the December meeting will be a “black box” event given the variation in projections before and after recent cooler-than expected U.S. inflation data, leaving gold sensitive to upcoming data as buyers look “for greater conviction that current rate hike expectations are well-anchored,” Jun Rong added.
High rates have kept a leash on gold’s traditional status as a hedge against high inflation and other uncertainties this year, as they translate into higher opportunity cost to hold the non-yielding asset.
Holdings of the top SPDR Gold Trust gold-backed exchange-traded-fund have shed about 68 tonnes since the beginning of this year.
Spot Platinum fell 0.6% to $981.90 per ounce, while palladium edged 0.2% higher to $1,885.13.