Gold heads for first weekly gain in five on muted dollar, inflation woes

Spot gold rose 0.7% to $1,812.03 per ounce by 8:18 a.m. ET, on course for about a 1.6% rise this week

U.S. gold futures rose 0.9% to $1,813.30

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Gold rose on Friday en route to its first weekly gain in five buoyed by a subdued dollar, with bullion’s safe-haven allure also helped by inflationary risks

Spot gold rose 0.7% to $1,812.03 per ounce by 8:18 a.m. ET, on course for about a 1.6% rise this week. U.S. gold futures rose 0.9% to $1,813.30

The dollar steadied near a more than one-week low touched on Thursday, a day after the U.S. Federal Reserve signaled three interest rate hikes by end-2022, burnishing gold’s appeal for overseas buyers

Non-yielding gold also got a fillip from a dip in U.S. Treasury yields

Analysts said gold gained despite the possibility of higher U.S. interest rates, which increase the opportunity cost of holding bullion, because rate hike prospects had been priced in before the Fed announcement

“A combination of real yields falling back to minus one along with a weaker dollar, has prompted this short covering rally in gold,” said independent analyst Ross Norman, adding gold could test the $1,835 level in early January

“Observers are watching to see to what extent gold can build any sort of momentum on this move, and it seems to struggle towards the upside

Safe-haven gold also seemed to take some cues from reduced risk appetite due to fears over the Omicron coronavirus variant

“The gold market is benefiting from high inflation, which is outweighing the Fed’s hawkish stance… Physical off takes of gold by major consumers are holding up well,” ANZ analysts said in a research note

Euro zone inflation surged to its highest rate on record in November

Palladium rose 4.5% to $1,807.75, extending gains from a sharp rally on Thursday, which traders attributed to a correction following an about $300 tumble in the prior five days/CNBC