Gold set for weekly gain on weaker dollar, inflation woes

[BENGALURU] Gold prices were steady on Friday (Feb 4), and set for a weekly gain as a weaker dollar, concerns over stubborn inflation and tensions surrounding Ukraine lifted demand for the safe-haven bullion.

Spot gold was at US$1,806.86 per ounce, as of 1.32 am GMT. In the previous session, bullion touched US$1804.4 as a weaker dollar and risk-off sentiment in the equity markets helped counteract pressure from a jump in US Treasury yields.

The metal has gained nearly 0.9 per cent so far this week. US gold futures edged 0.2 per cent higher to US$1,807.50.

The dollar index was set for its biggest weekly drop since March 2020, lifting demand for the greenback-priced bullion among buyers holding other currencies.

The Federal Reserve's inflation fight should be its top priority, US President Joe Biden's Fed nominees told lawmakers on Thursday, signalling support for a hawkish pivot in monetary policy that's already well underway.

Russia has formulated several options as an excuse to invade Ukraine, including the potential use of a propaganda video showing a staged attack, the United States said.

Gold is considered a hedge against inflation and geopolitical risks, but interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

The European Central Bank opened the door on Thursday to a 2022 interest rate hike in a policy turnaround, while the Bank of England raised rates to fight inflation.

The International Monetary Fund said it was "too early" to say if the world was facing a period of sustained inflation.

Among other metals, spot silver edged up 0.2 per cent to US$22.43 per ounce, platinum inched up 0.1 per cent to US$1,034.87 and palladium was steady at US$2,325.70 per ounce. REUTERS