Singapore: Gold firmed near $1,200 (Dh4,404) an ounce on Friday but the metal was headed for its second straight weekly drop, weighed down by uncertainty over the timing of an interest-rate increase by the US. Federal Reserve.
Spot gold edged up to $1,200.80 an ounce by 0701 GMT after dropping 0.3 per cent on Thursday. The metal has lost 0.6 per cent this week.
Expectations that the US central bank would start raising rates in June have been reassessed after recent sluggishness in US economic data and many are now betting that policy will not be tightened until September
Strong data could still prompt the US central bank to raise rates sooner, which would dent demand for bullion, and the uncertainty has led to caution in bullion markets.
However, gold failed to benefit from weak data on Thursday on US housing starts and factory activity in the mid-Atlantic region, nor from a resulting drop in the dollar.
“Until upcoming economic data makes the US rate picture a little more clear, we believe gold is likely to remain stuck in choppy, directionless trading in the near term,” said HSBC analyst James Steel.
Adding to the uncertainty were comments from Fed officials on Thursday that showed officials at odds over the timing of the rate move.
Investors will be watching US inflation data later on Friday for more clues about the economy.
Dollar moves will also be monitored. The dollar wallowed at its lowest in over a week against a basket of major currencies on Friday.
Further weakness in the dollar could push up gold prices as bullion is seen as a safe-haven asset.
Elsewhere, physical buying in the world’s top two gold-consuming countries remained slow this week. Premiums in China improved only slightly and those in India slipped as prices stabilised at $1,200 an ounce.
Among other precious metals, silver and platinum
were headed for weekly declines, while palladium/swas poised for its third straight weekly gain.