Gold rises as dollar drops on weak U.S. data

Jay Anderson
July 17, 2017

Investors concerned by the prospect of higher interest rates exited in droves -just as the metal capped its biggest weekly advance in six months on dovish USA economic data.

"The rate hike and the balance sheet tapering should inject a more positive growth outlook. globally and that should push gold prices down to our $1,200 an ounce estimate by the end of the year".

U.S. consumer price index inflation was flat in June against expectations of a 0.1 percent increase, while the annual rate at 1.6 percent came in below consensus of 1.7 percent.

Spot gold was up 0.88% to United States dollars 1,227.71 per ounce.

The dollar was little changed against a group of peers early on Friday, as currency investors remained cautious ahead of USA inflation data due later in the session. Some had been expecting another rate hike in 2017.

Fed Chair Janet Yellen's comments to the US Congress this week "were more dovish than originally anticipated", said David Meger, director of metals trading for High Ridge Futures in Chicago.

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Friday's "data reaffirms the delay", he said.

Narrow ranges prevailed ahead of the USA open on Friday with bears unable to make any further impression on prices with a gradual advance to the $1,220 area. The contract finished the week up 1.5 per cent, its first gain in six weeks. "In order to turn neutral again we need to move back above that level", he said.

Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD, fell 0.43 per cent on Thursday from Wednesday. Economists surveyed by The Wall Street Journal had expected overall prices to advance 0.1% on the month.

In silver, there was a sharp split between funds, which had largely sold off their record long position, and ETF investors, who had been recently buying, Hansen said.

Excluding the volatile food and energy categories, prices rose 0.1 percent in June and 1.7 percent from a year earlier. Platinum rose 0.6 percent to $906.70 per ounce.

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