Gold prices were poised for a second monthly gain on Friday as lingering economic concerns and a weaker dollar drove investors to the safe-haven asset, with markets now focused on the Federal Reserve’s meeting due next month.
Spot gold held its ground at $1,989.50 per ounce by 0310 GMT, and was headed for a 1.1% monthly gain.
US gold futures were flat at $1,999.00. Rival dollar, on the other hand, was set for a monthly decline, making gold a more attractive bet for other currencies holders.
However, Clifford Bennett, chief economist at ACY Securities said, going into this next Fed meeting, there is likely to be some continued caution among gold buyers, as the battle to stay above $2,000 and break into a new era continues to rage.
The Federal Open Market Committee gathers on May 2-3, and markets are pricing in an 85.4% chance of a 25-basis-point rate hike. While gold is considered a hedge against economic uncertainties, higher rates tend to dull zero-yielding bullion’s appeal.
“(But) from a safe-haven perspective gold has been on the rise in recent times,” Bennett said, adding the US GDP slowed sharply and challenges persist for global economies going forward.
Bullion had scaled more than a year’s peak at $2,048.71 in mid-April.
Meanwhile US economic growth slowed more than expected in the first quarter, and the Fed’s emergency lending to banks rose modestly in the latest week and remained at very high levels, even as many central bankers argue the worst of the banking sector’s latest stresses are waning.
Gold climbs on subdued dollar, US data in spotlight
Investors now await the core Personal Consumption Expenditures (PCE) index data for March due at 1230 GMT.
Among other precious metals, spot platinum rose 0.1% to $1,078.21, palladium added 0.3% to $1,499.96. Silver was flat at $24.95. Reuters
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