Gold hits its highest since May 1 on political uncertainty, weaker dollar
Gold hit on Friday its highest in nearly four weeks in response to a weaker dollar and political uncertainty that led investors to shun riskier assets in favor of bullion.
“We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down,” analyst Carsten Menke at Julius Baer in Zurich said.
Leaders of the world’s rich nations face difficult talks with Donald Trump at a G7 summit in Sicily on Friday after the U.S. president criticized NATO allies for not spending more on defense and accused Germany of “very bad” trade policies.
Gold is used as an alternative investment during times of political and financial uncertainty.
Spot gold was up 1.02 percent at $1,268.21 per ounce. U.S. gold futures gained $11.70 to settle at $1,268.10 an ounce.
Menke expects gold to remain rangebound with a price target of $1,200 in three months.
“The headwinds are coming from U.S. monetary policy. We do expect a rate hike in June and we see the dollar strengthening again. On the upside, there’s a lot of uncertainty, which keeps people from selling gold and maybe causing a little bit of buying.”
Data on Friday showed U.S. gross domestic product increased at a 1.2 percent annual rate in the first quarter instead of the 0.7 percent pace reported last month, supporting the dollar.
Among other precious metals, spot silver was up 1.11 percent at $17.31 and was on
track to gain 3.3 percent this week, its biggest weekly rise since early January.
Platinum rose 0.99 percent to $955.75, after hitting $961.24 earlier, its highest in a month.
Head of Technical Analysis Stephanie Aymes at Societe Generale said a bullish formation on the charts means platinum is expected to head towards $991.
“Platinum has been tracing a pattern similar to a triangle and more importantly a probable double bottom at $900/$890 levels,” she said in a note.
Platinum is up 2.8 percent for the week, the biggest weekly rise since early January.
Palladium was up 2.53 percent at $790.50 and has gained 1.8 percent this week, its first weekly gain this month.
Source: Reuters
