Gold jumped to a near two-week high on Friday as the US dollar slipped on tepid US inflation data, outweighing an overall strong first-quarter growth report.
Spot gold gained 0.7 per cent to $US1,286.41 per ounce after hitting its highest level since April 16, at $US1,288.59.
The metal, which on Tuesday touched its lowest level since late December, at $US1,265.90, was up nearly one per cent on Friday and poised for its first weekly gain since March 22.
U.S. gold futures settled 0.7 per cent higher at $US1,288.80 an ounce.
“The main reason is the fact that the (US) dollar is pulling lower today,” said Bob Haberkorn, senior market strategist at RJO Futures.
But, he said, “We have to be cautious about this move. It looks like a false positive because I expect equities to continue to be strong next week, pressuring the precious metals.”
The US dollar index fell, making gold cheaper for holders of other currencies, after the US first-quarter report on growth in gross domestic product, which was strong overall, was overshadowed by the soft inflation data.
The core personal expenditures consumption price index figure, the Federal Reserve’s preferred inflation gauge, increased at only a 1.3 per cent rate versus 1.8 per cent in the prior quarter.
“Also, there seems to be a bit of short covering as we are heading into the weekend and some technical buying,” said Jim Wyckoff, senior analyst with Kitco metals.
But even strong data out of the United States was unlikely to change the Federal Reserve’s monetary strategy, analysts said.
According to a Reuters poll, major central banks are done tightening policy as the global growth outlook has softened across developed and emerging economies, with scant prospects for a surge in inflation.
“Despite a significant drop in long-term real rates, gold prices have remained flat year-to-date as recession fears have receded since late last year,” Goldman Sachs said in a note.
Central bank gold purchases have been running strong this year, which could support prices, Goldman said.
While gold has fallen more than four per cent from a peak in February, bullion’s recovery from this week’s four-month low is painting a neutral picture in technical charts.
Gold looks neutral in a $US1,274-$US1,284 range and an escape could suggest a direction, said Reuters technical analyst Wang Tao.
Among other precious metals, silver rose 0.7 per cent to $US15.04 per ounce while platinum was up 1.7 per cent to $US897.25.
Palladium advanced three per cent to $US1,458.01 per ounce, its highest level since March 27.