Gold rose on Friday as forecast-beating euro zone inflation boosted the euro against the dollar, while global stock markets retreated from Wednesday’s record highs as concerns about global trade.
The euro rose towards 5-1/2 month highs as the data was seen as keeping pressure on the European Central Bank to start dialing back stimulus measures as early as June. That lifted gold, which is priced in the U.S. currency.
Spot gold was up 0.29 percent to $1,267.39 while U.S. gold futures for June delivery were up $2.40 to $1,268.30. Spot gold was down 1.4 percent from last Friday’s level, its biggest weekly loss since early March.
“At this point, $1,300 looks like it’s more appealing for gold than $1,100,” ING analyst Hamza Khan said.
“A bit more weakness in the dollar, combined with more movements around North Korea, could be the situation that sets the stage for higher gold prices.”
Jitters over tensions in the Korean peninsula and the threat of a strong showing from an anti-European Union candidate in the French elections helped drive gold higher last week.
However, it is now on track for its biggest weekly drop in seven as fading concerns over Korea and a strong showing in the first round of the French vote from centrist candidate Emmanuel Macron sharpened risk appetite, pressuring gold.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 0.1 percent to 853.36 tons on Thursday. Holdings are down by more than 6 tons since Tuesday.
Spot gold was down 1.3 percent from last Friday’s level, its biggest weekly loss since early March, though its descent has slowed.
“Most of the correction should be done by now,” Commerzbank analyst Daniel Briesemann said. “We see good support at this level. There are a lot of uncertainties remaining.”
“The high-risk appetite at the beginning of the week seems to have abated, at least for now. This has definitely helped support the gold price, and the dollar is supportive as well.”
Banks remain stubbornly cautious on gold’s price prospects
Banks remain stubbornly cautious on gold’s price prospects this year in spite of a strong first-quarter performance, a Reuters poll showed on Friday, as the prospect of higher interest rates take the shine off the metal.
Among other precious metals, silver rose 0.16 percent at $17.25 an ounce, while platinum advanced 0.18 percent to $941.70.
Palladium was up 1.47 percent to $827. It was the only weekly gainer among the precious metals, set to finish the week with a 4.2 percent rise. A Reuters poll predicted palladium would register its strongest year on record in 2018.