Classifieds powered by Gulf News

Gold set for first weekly gain in four weeks

Spot gold was up 0.4% at $1,257.76 an ounce and set for a weekly gain of 0.8%

Gulf News

LONDON: Gold prices rose on Friday and were set for their first weekly gain in four weeks as uncertainty over the passage of US tax reform pushed the dollar to a nine-day low against the yen.

Two more Republican senators insisted on changes to tax cut legislation, denting confidence that it will pass in its current form.

“The US dollar is weakening a little and that’s benefiting gold,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Spot gold was up 0.4 per cent at $1,257.76 (Dh4,616) an ounce at 1148 GMT and set for a weekly gain of 0.8 per cent.

US gold futures were 0.3 per cent higher at $1,260.50 an ounce.

Gold touched a five-month low of $1,235.92 on Monday but recovered after the US Federal Reserve on Wednesday raised interest rates for the third time this year.

Rate rises usually put pressure on gold prices because they push up bond yields, reducing the appeal of non-yielding bullion, and tend to boost the dollar, making gold more expensive for holders of other currencies.

But markets had priced in Wednesday’s rise and gold instead rose while the dollar and bond yields fell after the Fed kept its outlook of three rate rises next year unchanged and said US tax cuts would not significantly spur growth.

Previous rate increases have also seen gold sold ahead of the decision and bought after it, said Societe Generale analyst Robin Bhar.

But gold’s bounce would be short-lived because other asset classes including equities, industrial metals and even bitcoin appeared to offer better returns, he said.

“If you are a speculator I don’t think gold ranks in the top three of where to employ that money. The opportunity cost of gold has gone up because there’s better opportunities elsewhere.”

Gold is up 9 per cent this year while global shares and industrial metals have gained around 20 per cent and bitcoin 1,750 per cent.

Gold would likely remain in a trading range of $1,200-$1,260, Bhar said.

On the technical side, resistance was at Thursday’s high of $1,258 and the 200-day moving average at $1,268, said MKS PAMP trader Tim Brown.

In other precious metals, silver was up 0.6 per cent at $15.96 an ounce and set for its first weekly gain in four weeks, up around 0.7 per cent.

Platinum was 0.3 per cent higher at $880.74 an ounce but set for a fourth weekly fall, down 0.8 per cent.

Palladium was flat at $1,033.20 and but up 2.6 per cent this week after hitting $1,038 an ounce on Thursday, the highest since early 2001.