Gold holds ground as dollar weakens

Gold prices held steady on Friday, but were set for a slight weekly gain buoyed by a softer dollar and safe-haven demand from escalating tensions in the Middle East, even as U.S. Federal Reserve officials bruised hopes of early rate cuts this year.

Spot gold was flat at $2,024.08 per ounce as of 15:06 ET (1436 GMT), and was on track for a 0.6% weekly rise. U.S. gold futures were 0.2% higher at $2,033.70 per ounce.

The dollar index was heading for its first weekly dip in almost two months. A weaker dollar makes greenback-priced bullion less expensive to overseas buyers.

“Gold is up primarily on the fact that the U.S. dollar is a little weaker,” said Bob Haberkorn, senior market strategist at RJO Futures.

“It’s a delicate walk right now in the precious metals market, but there is a lot of safe haven buying despite the rates being as high as they are.”

Fed Governor Christopher Waller said on Thursday that he was in “no rush” to cut rates, firming investor bets against U.S. interest rate cuts before June.

Most policymakers at the Fed’s last meeting were concerned about the risks of cutting interest rates too soon, minutes showed.

Recent data showing higher-than-expected U.S. consumer and producer prices also dashed speculation about an early interest rate cut, further weighing on bullion.
Lower interest rates boost the appeal of holding non-yielding bullion.

“More hawkish comments from Fed officials overnight have been a modest drag for the yellow metal,” said UBS analyst Giovanni Staunovo.

Meanwhile, a surge of interest in bitcoin exchange-traded funds (ETFs) is prompting investors to swap out holdings in gold-backed ETFs.

Spot platinum dropped 0.3% to $904.25, palladium gained 0.9% to $976.91. Silver lost 0.2% to $22.70, and was down 3% so far in the week.