(MENAFNEditorial) Gold prices rose for a sixth straight session on Friday, to notch up the largest weekly gain in two months as the U.S. dollar slid to its lowest level in more than a year, underpinning demand for the precious metal.Gold for August delivery closed up 0.72% at $1,254.48 on the Comex division of the New York Mercantile Exchange. For the week, the precious metal was up 1.97%. The U.S. dollar index, which measures the greenbacks strength against a trade-weighted basket of six major currencies, ended down 0.32% at 93.78, the lowest close since June 22, 2016. The index ended the week down 1.32%, marking its second straight weekly decline. A weaker dollar tends to boost prices for gold, which is denominated in the U.S. currency. The greenback was pressured lower by the stronger euro, which was boosted by expectations that the European Central Bank is moving closer to tapering its bond-buying program and fresh political turmoil in Washington. On Thursday, the investigation into alleged links between President Donald Trumps campaign and Russia in last years election is extending into his business. Earlier in the week, Republican lawmakers pulled the plug on the latest version of a contentious bill to replace Obamacare, delivering a major policy blow to the Trump administration. The failure to deliver on healthcare reform indicated that Trumps other legislative efforts, such as overhauling the tax code and implementing fiscal stimulus could face difficulties. Hopes for tax reforms and fiscal stimulus under the Trump administration helped drive the dollar to a 14-year high after the November election. The dollar has now given up all of its post-election gains. Doubts over the Federal Reserves plans for a third rate hike this year have also fed into dollar weakness. The Fed is to hold its next meeting on Wednesday and is widely expected to hold policy steady.
Gold demand in Asia eroded this week due to higher prices with a seasonal slowdown denting the lure for the precious metal in second-biggest consumer India. Dealers in India offered discounts for gold, as the absence of key festivals kept demand subdued, especially as the wedding season has passed. "Every year, demand remains weak in July. There is no major festival this month. Wedding season is almost over,"For the next three to four weeks, demand will remain on the lower side. It will improve from the second half of August." Dealers were offering a discount of up to $1 an ounce this week over official domestic prices, compared to a discount of $1.20 last week, said four sources from jewellers, banks and gold dealers. The domestic price includes a 10 percent import tax. Local gold prices MAUc1 have risen 2.7 percent since July 10 after falling to the lowest level in six months. "The recent rebound in prices is also keeping buyers on the sidelines. They are waiting for a clear trend. High prices kept buyers on the sidelines elsewhere in Asia as well. "Demand has softened again at current price levels. It had picked up when gold was trading closer to $1,200, but has again abated as the market waits for a clearer indication as to which way it may swing," The international spot gold benchmark XAU= hit a three-week high of $1,248.35 an ounce on Friday, with prices set for an about 1.5 percent weekly gain, bolstered by weakness in the U.S. dollar, which was at multi-month lows. GOL/
In top consumer China, premiums were slightly below the $10 per ounce level reported last week, while in Hong Kong, the premiums were at 60 cents to $1 against 70 cents to $1 in the previous week. Singapore premiums were in a range of 75 cents to $ 1.10 per ounce, compared with a range of 80 cents to $1.10 last week. "Demand should remain quiet in the near-term, especially with the upcoming summer holidays in the region," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Gold prices showed slight gains in overnight trade on Friday, hitting its highest level this month, concerns over investigations into U.S. President Donald Trumps alleged ties with Russia drove investors into the safe haven asset. On the Comex division of the New York Mercantile Exchange, gold for August delivery gained $ 1.19, or 0.10%, to $ 1.246.69 a troy ounce by 3:44AM ET. Gold hit an intraday high of $ 1.247.65 earlier in the session, its highest level since June 30, and was on track for weekly gains of 1.5% in what would be its second consecutive weekly rise. The Republican Partys incapacity to achieve a replacement healthcare plan and headlines revolving around multiple congressional and federal investigations into possible ties between Trump and Russia during the 2016 presidential campaign have recently put pressure on the dollar. The U.S. dollar index, which measures the greenbacks strength against a trade-weighted basket of six major currencies, dropped 0.07% at 94.01 by 3:44AM ET. A weak dollar usually supports gold prices, as it bolsters the metal's appeal as an alternative asset and makes dollar-priced commodities more attractive to holders of other currencies. Gold was also supported this week as both the European and Japanese central banks announced that they would continue their accommodative monetary policy. Barring further political developments stateside, Friday was expected to be a quiet day for the precious metal as no major economic reports were scheduled for release.
Elsewhere in metals trading, silver inched up 0.06% at $16.355 a troy ounce.
Gold prices edged lower in European trade on Thursday, as market players awaited the outcome of the European Central Bank's meeting for fresh clues on when it will start to shift away from its ultra-easy policy. Comex gold futures were at $1,238.68 a troy ounce by 3:20AM ET, down $ 3.30, or around 0.3%. Gold prices finished a few cents higher on Wednesday, extending their streak of gains to a fourth session. The ECB's latest interest rate decision is due at 1145GMT on Thursday, with no big changes expected. Most of the focus will be on President Mario Draghi's press conference 45 minutes after the announcement, as investors look for more clues on when and how the ECB could scale back its massive quantitative easing program. Market experts believe the central bank is likely to wait until September before announcing a tapering of its 60 billion euros of monthly asset purchases. Earlier in the session, the Bank of Japan kept monetary policy steady as a two-day meeting concluded. The central bank also cut its inflation forecasts for fiscal years 2017/2018 and 2018/2019. Besides central banks, investors will focus on U.S. data due later in the session to gauge the strength of the world's largest economy and how it will impact the Fed's view on monetary policy. Weekly jobless claims and the Philadelphia Fed manufacturing survey are both due at 8:30AM ET. Gold prices have been well-supported in recent sessions amid fading expectations for another rate hike by the Federal Reserve this year. Futures traders are pricing in less than a 40% chance of a rate hike by December, according to Investing.coms Fed Rate Monitor Tool, as recent dovish comments from Chair Janet Yellen and soft inflation data raised doubts over whether policymakers will be able to stick to their planned tightening path. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
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