Spot gold rose 0.4 percent to $1,358.74 an ounce at 0429 GMT, after touching a three-week high of $1,359.47.
The metal is up more than 3 percent this week, set for its best weekly performance since the week ended April 29, 2016.
U.S. gold futures climbed 0.5 percent to $1,361.60 per ounce.
Spot gold has gained 4 percent from a one-month low of $1,306.81 last week, mostly on a weaker dollar.
· "Gold has risen this week mainly due to a weaker dollar and physical buying ahead of Chinese New Year," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services.
"Also, the market is starting to fall in love with inflation trades again. Gold could be the standout performer this year if that's the case though some wearing off can come once the seasonal buying is done," Kumar said.
· The dollar languished near a three-year low against a basket of currencies on Friday , heading for its biggest weekly loss in two years, as a slew of bearish factors offset support for the greenback from rising Treasury yields amid firming inflation.
· U.S. producer prices accelerated in January, boosted by strong gains in the cost of gasoline and healthcare. The Labor Department said its producer price index for final demand rose 0.4 percent last month after being unchanged in December.
In a second report, the Labor Department said initial claims for state unemployment benefits increased by 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10.
· "A combination of rising inflation, coupled with slightly weaker U.S. growth readings and a struggling dollar should continue to provide gold with an element of support," INTL FCStone analyst Edward Meir said.
"Technically, the January 2016 high was $1,365 and the 2016 high was $1,375 ... If gold can clear both those levels, there is lot of room above," Gupta of Adroit said.
· Among other precious metals, spot silver was up 0.2 percent at $16.91.
Platinum rose 0.6 percent to $1,006.90, after hitting its highest since Feb. 1 at $1,007.40.
Palladium was up 0.2 percent at $1,020. The metal has gained 4.5 percent this week, its best since week-ended Oct. 13.
· Technically, April gold futures prices closed the day session near mid-range and saw a corrective pullback from Wednesday’s big gains. The gold bulls have the firm overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the January high of $1,370.50. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,320.00. First resistance is seen at today’s high of $1,359.80 and then at $1,370.50. First support is seen at $1,350.00 and then at $1,340.00. Wyckoff's Market Rating: 7.0
· Don’t expect a strong U.S. dollar this year, said Capital Economics, adding that a reversal in greenback’s expectations will work in favor of higher gold prices.
“We have recently decided to abandon our forecast of a stronger dollar this year,” Simona Gambarini, commodities economist at Capital Economics, said in a note published on Thursday. “We now expect the dollar to end2018 close to current levels against the euro and yen and a bit weaker against sterling.”
In light of weaker U.S. dollar, Capital Economics now projects higher gold and silver prices, revising their forecasts up by $70 and $0.50 respectively.
“As a result of this change, we are revising up our forecasts for gold and silver prices from $1,200 per ounce to $1,270 and from $15.00 to 15.50 respectively,” Gambarini said.
Reference: Reuters, Kitco
Thai
Eng