Gold rose on Friday as the dollar held steady near a three-month high and with Asian stocks subdued, staying on track for a second straight weekly gain ahead of the US third-quarter GDP data expected later in the day.
Spot gold was up 0.3 per cent at $1,270.91 an ounce at 0430 GMT. It was up about 0.4 per cent for the week so far. US gold futures rose 0.2 per cent at $1,272.00 per ounce.
But recent robust US data has strengthened the case for an early interest rate hike, pressuring gold prices, and strong GDP numbers may push prices lower, said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
US interest rate futures are implying a more than 78 per cent chance of the US Federal Reserve raising interest rates by December, according to the CME Group’s FedWatch tool.
Higher interest rates raise the opportunity cost of holding non-yielding assets such as gold and boost the dollar, in which the metal is priced.
The dollar index, which measures the greenback against a basket of currencies, was steady at 98.849. The unit was also holding near its highest in three months versus the yen.
Asian stocks
Asian stocks made a subdued start on Friday, with MSCI’s broadest index of Asia-Pacific shares outside Japan edging down 0.3 per cent.
Spot gold may test a support at $1,261 per ounce, a break below which could cause a loss to the next support at $1,251, according to Reuters technical analyst Wang Tao.
Bullion markets may have largely absorbed the impact of a rate rise and moderately higher yields will not necessarily weigh on prices - as long as the US dollar does not rally further, HSBC analyst James Steel said in a note.
Physical demand
Meanwhile, physical demand from emerging markets is coming back and should support higher prices, Steel said.
Demand for bullion in India is expected to pick-up during the Dhanteras and Diwali festivals, when gold is traditionally given as a gift.
Silver was up 0.5 per cent at $17.67 an ounce and platinum was up 0.6 per cent at $968.74. Silver was on track to notch its biggest weekly gain in five.
Platinum was heading towards its biggest weekly rise in three months. Palladium rose 0.8 per cent to $614.47 per ounce, but was still set to mark its fourth consecutive weekly decline.