Gold prices steadied around their three month highs on track for their biggest weekly advance in more than three month aided by a weaker dollar.
The dollar turned lower weighed down by weaker disappointing US economic data. Data from the US Federal Reserve on Thursday showed that consumer sentiment fell more than expected this month
“Investors are trying to balance portfolio allocations between the expectations for better performance in risk (perhaps equity) assets due to quantitative easing outside the U.S. and risks of disappointment in growth by owning enough in assets such as gold,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, told Market Watch.
Gold for June delivery inched up by 10 cents to settle at $1,225.30 a troy ounce on the Comex Division of the New York Mercantile Exchange. This is the highest the most active contract in the US has settled in more than 3 months.
The contract advanced by 3% for the week.
Gold for immediate delivery was up 0.3% at 1224.30 a troy ounce on hopes that weakness in the economy would persuade the Federal Reserve to delay their monetary tightening policy until after summer.
A hike in the interest rates would be bearish for non-interest bearing commodities like gold which rely on changes in prices for profit.
Market analysts are banking on the rally in gold prices to continue with the US economy expected to remain weak for some time.
“Our view is that the underlying data is getting weaker and it has been weak for a while but I think there are still some in the market that seem to be holding out hope that maybe we will get a rebound in the U.S.,” Mike Dragosits, senior commodity strategist for TD Securities in Toronto, told Reuters.
“But that doesn’t appear to be the case and that’s why we’re trading at the top end of these ranges.”
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