Gold prices edged up on Friday, supported by a weaker dollar amid worries about a possible US government shutdown, but the precious metal was still on track for its first weekly drop in six weeks.
Spot gold was up 0.3 per cent at $1,331.10 an ounce by 0324 GMT. Gold had on Thursday touched its weakest level since January 12 at $1,323.70, having fallen from recent four-month highs. Spot gold has fallen 0.5 per cent so far this week, its worst since the week-ending December 8.
US gold futures were up 0.3 per cent at $1,331.40. The US dollar fell amid worries over a possible US government shutdown. The dollar index was down 0.1 per cent at 90.394 on Friday.
Legislation to avoid a US government shutdown at midnight on Friday advanced in Congress, as the House of Representatives had on Thursday night approved an extension of federal funds through February 16, although the Bill faced uncertain prospects in the Senate.
“The overall run in gold has been overdone ... People have to be careful with further allocations in gold and other asset classes as well for now,” said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
“The overall weakness in US dollar is over ... I can't be more cautious on gold price at the moment.” The dollar has fallen since 2017 largely on expectations central banks besides the Federal Reserve are seeking to end their policy of ultra low, even negative, rates that they adopted to combat the 2008 global financial crisis and the recession that followed.
Fed rate hike
The US Federal Reserve should raise interest rates three to four times in both 2018 and 2019, Cleveland Federal Reserve Bank President Loretta Mester had said on Thursday, a pace that is a bit faster than many of her fellow policymakers prefer.
“The fundamentals remain the same with the large trading range remaining intact at $1,200 to $1,400, with no major change in global political tensions or rate hike outlook,” To said.
Spot gold is still targeting $1,311 per ounce, as suggested by a small double-top and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.
Meanwhile, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 1.42 per cent to 840.76 tonnes on Thursday from Wednesday. Among other precious metals, silver rose 0.5 per cent to $17.01 per ounce. Platinum rose 0.2 per cent to $1,002, while palladium fell 0.5 per cent to $1,105.