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Gold dips as dollar rebounds, but set for a third weekly gain

· Gold prices retreated on Friday after rising sharply for the past three sessions as the dollar rebounded, but the metal was on track to post a third straight weekly gain on stimulus hopes in the United States.

· Spot gold fell 0.3% to $1,880.20 per ounce by 0323 GMT. For the week, it was up 2.3% so far. U.S. gold futures dropped 0.3% to $1,885.30.

· “The U.S fiscal stimulus is more or less priced in ... so traders are trying to lock in profits before the weekend,” said Margaret Yang, a strategist at DailyFX.

· Meanwhile, U.S. Congressional Republicans and Democrats scrambled to pass a new round of coronavirus aid on Thursday with lawmakers from both parties saying that failure to agree was no longer an option.

· A break above the $1,892 area with support from a dovish U.S Federal Reserve and a weaker dollar could signal further upside with resistance at $1,910 ahead, Yang said.

· Analysts also said gold would find support from the Fed’s promise to continue its bond-buying program until “substantial further progress” is seen in restoring full employment and hitting its 2% inflation target.

· There’s a lot of expectation getting built into gold prices, but with both the U.S. government and the Fed making the right noises about further stimulus and support for the economy, gold could climb above $1,900 by year-end, said Michael Langford, director at corporate advisory AirGuide.

· Denting sentiment for gold further, advisers to a U.S. regulator overwhelmingly endorsed emergency use of Moderna Inc’s coronavirus vaccine.

· Gold prices push towards $1,900, ignore positive U.S. new home construction data

The U.S. housing sector continues to be a pillar of strength for the economy as construction of new homes remains relatively strong.

U.S. housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547 million units in November, the Commerce Department said on Thursday. The data were in line with expectations as consensus forecasts compiled by most news organizations called for starts to be around 1.53million. October’s data were revised 1.528 million units.

For the year new home construction is up 12.8%.

At the same time, building permits data, which is a precursor to future projects, was up 6.2% at 1.64 million in November, up from October’s revised total of 1.544 million. For the year, building permits rose 8.5% from the November 2019 levels.

The gold market is not seeing much reaction to the stronger than expected housing data. The precious metal has moved to within striking distance of $1,900 an ounce. The market has seen renewed buying momentum following dovish comments from the Federal Reserve Wednesday. February gold futures last traded at $1,893.80 an ounce, up 1.87% on the day.

"Housing activity remains among the most resilient areas of the economy, and although homebuilder confidence pulled back slightly in December, it remains within reach of the record high hit in the prior month," said Katherine Judge, senior economist at CIBC.

· Silver fell 0.9% to $25.82 an ounce. Platinum dropped 0.9% to $1,034.50 and palladium eased 0.3% to $2,334.53, but was up 0.7% in the week.

Reference: CNBC, Kitco