Gold prices edged up from one-year lows on Friday after US President Donald Trump expressed concern about the strength of the dollar and interest rate increases by the Federal Reserve, pushing the greenback lower.
Spot gold was up 0.1 per cent at $1,224.04 an ounce at 1209 GMT and US gold futures were flat at $1,223.90 an ounce.
But gold was still down 1.4 per cent this week, with little sign of an end to the slide in prices that has knocked more than 10 per cent off gold’s value since mid-May.
Driving the declines were a strengthening dollar and disillusionment among investors with bullion, said Macquarie analyst Matthew Turner.
The stronger dollar makes gold more expensive for buyers with other currencies. Higher interest rates are also a threat to gold because they tend to boost the dollar and raise the opportunity cost of holding non-yielding bullion.
“To see a turnaround (in prices) you need something to ignite that turnaround,” Turner said.
One possible trigger could be sharp falls on global stock markets that could drive investors to gold, seen as a safe asset, said Forex.com analyst Fawad Razaqzada. Another may be a sharp weakening of the dollar, which Turner said he expected to see later this year or next year.
Despite Trump’s intervention, the dollar was near one-year highs on Friday as Fed Chairman Jerome Powell did nothing this week to counter expectations of two more rate rises this year and said the United States was poised for several more years of growth.
Bank of America Merrill Lynch said on Friday fears of a trade war had seen global investors plough $5 billion into bonds this week while pulling $1.2 billion from gold.
Meanwhile, funds and money managers have cut their net long position in Comex gold to a 2-1/2-year low, helping drive down prices.
And gold-backed exchange traded funds (ETFs) tracked by Reuters have cut their holdings by 5.5 per cent, or 3.2 million ounces, since mid-May.
Gold on Thursday touched $1,211.08 an ounce, the lowest since July last year.
On the technical front, support was at gold’s July 2017 low of $1,204.90 and Fibonacci resistance was at $1,234.70, analysts at ScotiaMocatta said, adding that technical and momentum indicators suggested prices would fall further.
In other precious metals, silver was up 0.4 per cent at $15.33 an ounce but still down about 2.8 per cent this week.
Palladium was 1.6 per cent higher at $883.72 an ounce but set for a weekly loss of around 5.6 per cent.
Platinum had gained 1.7 per cent to $818.10 an ounce and was down around 1 per cent this week.