Gold steady on weaker US dollar, set for 3rd week of gains

[BENGALURU] Gold prices held firm on Friday as the US dollar hovered near one-week lows, keeping the metal on track for a third week of gains amid political uncertainties in the United States and Europe.

Spot gold was steady at US$1,238.16 per ounce at 0321 GMT, while US gold futures were down 0.2 per cent at US$1,239.

Gold is up 0.3 per cent so far this week and has risen about 7.5 per cent in 2017.

"Gold edged higher overnight on the back of a weaker US dollar and lower US Treasury yields. Add in a drop in the equity market and you have the holy trinity for higher gold prices,"said Stephen Innes, senior trader at OANDA.

"However, dealers are extremely cautious about running the market higher as the March Fed rate hike debate will likely play out for the foreseeable future."

Concern over US President Donald Trump's policies, as well as elections in the Netherlands, France and Germany this year, fueled gold's rise to a peak of US$1,244.67 on Feb 8.

But the prospect of a stronger US dollar and US Treasury yields after US Federal Reserve Chair Janet Yellen said US interest rates may need to be raised in March dragged gold to US$1,216.41 on Wednesday, its lowest since Feb 3.

The US dollar index , which measures the greenback against a basket of currencies, was at 100.490 on Friday. It hit a one-week low of 100.410 the day before.

"The greenback's softness continues to provide support to the precious complex," said MKS PAMP Group trader Jason Cerisola.

Spot gold may drop to US$1,230 per ounce as its correction from the Feb 8 high of US$1,244.67 may extend, according to Reuters technical analyst Wang Tao.

Holdings of SPDR Gold, the world's largest gold-backed exchange-traded fund, have risen 5.6 per cent so far this month, the most since June 2016.

"We don't expect much in the way of market movements going into Friday's session, but gold should nevertheless see something of a bid heading into the weekend," said INTL FCStone analyst Edward Meir.

Spot silver dipped 0.2 per cent to US$18.06 an ounce. The metal hit its strongest since Nov.11 at US$18.13 in the previous session.

Platinum edged up 0.1 per cent to US$1,013.20. Palladium fell 0.6 per cent to US$787.45. The metal, used in emission-controlling catalytic converters for the automotive industry, touched its best since Jan 24 at US$794.90 in the prior session. It has gained over 16 per cent so far this year.

REUTERS