Gold prices rose on Friday, supported by lingering tensions between the US and Iran and lower European bond yields, while investors awaited US inflation data to gauge the outlook for the Federal Reserve’s monetary policy.
Spot gold rose 0.7% to $5,032.49 an ounce at 0941 GMT, but was on track to decline 0.2% for the week. US gold futures for April delivery rose 1.1% to $5,052.70.
“What we’re seeing in the interest rate markets is that long-term rates in European trade are getting more expensive. That means yields are coming down, and the opportunity cost of holding gold is going down,” said Peter Fertig, an analyst at Quantitative Commodities Research.
Eurozone government bond yields were expected to fall for a second straight week on Friday, due to speculation over the leadership of the European Central Bank and rising geopolitical tensions.
US President Donald Trump on Thursday warned Iran that it must reach a deal over its nuclear program or “really bad things” will happen, setting a deadline of 10 to 15 days.
Goldman Sachs said in a note that it expects gold prices to rise slowly this year in a base case in which central bank purchases accelerate again and retail investors add exposure only in response to U.S. interest rate cuts.
US personal consumption expenditure data, the Federal Reserve’s preferred inflation indicator, is attracting attention as a clue for US monetary policy. Economists polled by Reuters expected core PCE to rise 0.3%. The deadline for data submission is 13:30 pm Japan time.
Traders largely expect the central bank to keep interest rates unchanged at its March policy meeting, according to CME’s FedWatch tool.
Non-yielding bullion tends to perform better when interest rates are low. In India, gold demand remained weak this week as price volatility deterred buyers while other major Asian hubs, including China, were closed for the Lunar New Year holiday.
Elsewhere, spot silver rose 2.8% to $80.57 an ounce. Spot platinum rose 2.3% to $2,117.66 and palladium rose 2.3% to $1,723.25. All metals were poised to record weekly gains.
(Reporting by Pablo Sinha in Bangalore)
