January 26, 2018 / 10:43 AM / a month ago

PRECIOUS-Gold climbs back towards 17-month peak as dollar slides

    * Spot gold set for sixth weekly gain in 7 weeks
    * Dollar resumes slide after late Thursday bounce
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Jan Harvey
    LONDON, Jan 26 (Reuters) - Gold rose on Friday, climbing
back towards the previous session's 17-month peak as suggestions
that senior U.S. officials may support a weaker dollar knocked
the currency lower. 
    The dollar slid 0.4 percent against the euro on Friday as
comments in favour of a weaker U.S currency by Treasury
Secretary Steven Mnuchin - though later somewhat contradicted by
U.S. President Donald Trump - led investors to suspect a
protracted decline in the greenback may be likely.       
    Spot gold        was 0.3 percent higher at $1,351.46 an
ounce at 1245 GMT, up 1.5 percent so far this week. The metal
hit its highest since August 2016 on Thursday at $1,366.07. 
    "Once again it's all about the dollar," Mitsubishi analyst
Jonathan Butler said. "Gold is now pushing against the highs of
mid-2016 and threatening to break out to levels not seen since
2013, but it is looking overstretched on several technical
indicators and there will probably be a degree of short-term
profit taking."
    "However our medium-term outlook remains constructive on
gold and we could well see gold at $1,400 this year if the
dollar and real rate environment remains favourable."
    Dollar weakness tends to benefit assets priced in the U.S.
unit, which become more affordable for holders of other
currencies, while ultra-low interest rates cut the opportunity
cost of holding non-yielding bullion.
    World stocks were set for their tenth straight week of gains
on Friday, having rallied over the past year on the back of a
synchronised uptick in global economic growth in a boon to
corporate profits and stock valuations.            
    Gold could benefit if that scorching run cools, GFMS
analysts at Thomson Reuters said, predicting volatility in
equities and concerns over global politics could lead to a spike
in gold prices above $1,500 an ounce this year.             
    U.S. gold futures         were down 0.9 percent at $1,350.30
an ounce. 
    Among other precious metals, silver        was up 0.6
percent at $17.40, having touched its highest in more than four
months at $17.69 on Thursday. It was this week's best performing
precious metal, climbing 2.4 percent from Friday's close. 
    "The U.S. dollar remains in the driving seat of the metal
markets, causing a lot of volatility for silver," Julius Baer
said in a note. "We remain neutral but lift our twelve-month
price target to $17.50 per ounce due to signs of improving
industrial demand."
    Platinum        was up 0.5 percent at $1,015.20, while
palladium        was little changed at $1,096.90. After hitting
record highs early this year, the metal was on track for its
second weekly loss, dropping nearly 1 percent so far this week. 

 (Additional reporting by Nallur Sethuraman in BENGALURU;
Editing by Mark Potter)
  
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