· Gold prices dipped on Friday, but still hovered near a three-week high, as the U.S. dollar index bounced from a three-year low and investors worried that U.S. inflation could heat up.
· The U.S. dollar limped up off a three-year low against a basket of currencies but still was headed for its biggest weekly loss in nine months as negative sentiment offset any support from rising Treasury yields. Spot gold was 0.3 percent lower at $1,348.58 per ounce by 2:21 p.m. EST (19:21 GMT), off a three-week peak of $1,361.76 in early trade. U.S. April gold futures settled up $0.9, or 0.1 percent, at $1,356.20 per ounce.
· Spot gold has risen 2.4 percent so far this week, putting it on track for its biggest weekly rise since October 2017.
· Gold was little changed for much of the session, but the rising dollar caused some consolidation, said David Meger, director of metals trading at High Ridge Futures.
"But there are still some inflationary concerns in the market. The overall trend in the dollar remains to the downside even though we are rebounding today," Meger said.
Fear that weakness could return to equities is also sparking safe-haven demand of gold, he added.
· The dollar has been reeling, with investors wary Washington might pursue a weak-dollar strategy. Other countries are considering tighter monetary policy, which could erode the yield advantage of U.S. fixed-income assets. On the physical side of the gold market, demand in Asia was muted by the Lunar New Year holiday. In India, physical gold sold at a discount for the first time in three weeks as demand slumped.
· Demand was down to a quarter of usual levels as buyers were deterred by the recent price rise, said Harshad Ajmera, owner of wholesaler JJ Gold House in Kolkata.
· Wall Street analysts have once again joined Main Street with a bullish short-term outlook on gold, based on the weekly Kitco News gold survey.
· Neil Mellor, senior currency strategist at BNY Mellon, is bullish on gold in the near term, citing a breakdown between the U.S. dollar and yields that point to more U.S. dollar weakness. “You have to like gold in this environment,” Mellor said.
· Kevin Grady, president of Phoenix Futures and Options LLC, also looks for a softer dollar to underpin gold. “Although we are seeing higher rates, gold seems to be focusing more on the weaker U.S. dollar,” Grady said. “I see gold higher next week.”
· So does Phil Flynn Phil Flynn, senior market analyst with at Price Futures Group. “A little dose of inflation fears and stock-market stability will find some buying in gold,” Flynn added.
· Jim Wyckoff, senior technical analyst with Kitco, also sees gold rising, commenting that “charts have turned more near-term bullish this week.”
· Meanwhile, Ole Hansen, head of commodity strategy at Saxo Bank, is among those who see gold lower on the risk of the dollar mounting a small comeback.
· Among other precious metals, silver was down 1.3 percent at $16.66 per ounce, still poised for a 2 percent weekly rise. Platinum gained 0.2 percent at $1,003.24 an ounce, after hitting its highest since Jan. 29 at$1,012.70. It was set for a 4.3 percent weekly increase.
Palladium was up 2.3 percent at $1,040.97 an ounce. It has risen 6.8 percent this week, its biggest weekly increase since October
Reference: Reuters, Kitco
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