Weaker dollar keeps gold on course for its third successive weekly gain

London — A weaker dollar helped to push gold up on Friday, putting bullion on track for a third weekly rise running though gains were capped by profit-taking on long positions.

Spot gold edged 0.1% higher at $1,196.08 an ounce by 11am GMT, up 2% on the week.

But the metal could not maintain a seven-week high of $1,206.98 touched in the previous session after president-elect Donald Trump’s failed to spell out his plans to grow the US economy spurred demand for safe-haven gold.

Investors cashed in bets on higher prices, said Mitsubishi analyst Jonathan Butler. "There’s clearly plenty of new long positioning that has come into the market. At these (price) levels there’s room to take profit," he said.

Gold has risen 6.5% since a mid-December low. US gold futures were down 0.2% at $1,196.90.

The dollar, which hit a five-week low on Thursday after Trump’s chaotic media conference, weakened 0.2% against a basket of currencies, making gold cheaper for non-US investors.

The higher gold price depressed physical gold sales in Asia this week as buyers stayed on the sidelines and premiums remained mostly unchanged. In India, the world’s second-largest consumer of the metal, higher prices prompted retail buyers to postpone purchases for wedding season. Investors were looking ahead to Trump’s inauguration on January 20, when analysts hope he will finally provide detail on infrastructure and spending promises that have driven a rally in US assets.

Such details could revive the rally and weaken the gold price, said Butler. "Trump’s economic policies, in particular tax cuts for corporates, could lead to ever-higher equity valuations that divert funds away from bullion and into higher-return assets," he said.

Analysts at Scotiabank, however, said they expected gold to strengthen further if support at $1,178 an ounce held. Several Fed officials on Thursday cautioned that Trump’s fiscal and tax plans could spur a short-term economic boost that would result in longer-run inflation and debt problems, potentially raising demand for gold as an inflation hedge.

Among precious metals, spot silver was flat at $16.77, having hit its highest level in almost a month at $16.92 in the previous session. The metal gained 1.8% this week. Platinum was down 0.1% at $971.15. It touched a two-month high of $990.10 the previous day. Palladium fell 0.3% to $754.18.

Reuters / BDLIVE