Gold prices rose on Friday, supported by lingering tensions between the United States and Iran and lower European bond yields while investors awaited U.S. inflation data to assess the outlook for Federal Reserve monetary policy.
Spot gold was up 0.7% at $5,032.49 an ounce by 0941 GMT, but was on course for a weekly decline of 0.2%. U.S. gold futures for April delivery were up 1.1% at $5,052.70.
“What we’re seeing in the interest rate markets is that prices are higher in the longer end in European trading. That means yields are down, and that is reducing opportunity costs for holding gold,” said Quantitative Commodity Research analyst Peter Fertig.
Euro zone government bond yields were set for a second straight weekly decline on Friday in a week marked by speculation over the leadership of the European Central Bank and by rising geopolitical tensions.
U.S. President Donald Trump warned Iran on Thursday that it must make a deal over its nuclear programme or “really bad things” will happen, setting a deadline of 10 to 15 days.
Goldman Sachs said in a note that in its base case, with central bank buying re-accelerating and private investors adding exposure only in response to U.S. interest rate cuts, it expects gold to grind slowly higher this year.
U.S. personal consumption expenditure data, the Federal Reserve’s preferred inflation gauge, is in focus for clues on U.S. monetary policy. Economists polled by Reuters forecast a 0.3% rise in core PCE. The data is due at 1330 GMT.
Traders largely expect the central bank to hold interest rates steady at its March policy meeting, according to CME’s FedWatch Tool.
Non-yielding bullion tends to perform well when interest rates are low. Gold demand remained subdued in India this week as volatile prices deterred buyers while other major Asian hubs, including China, were closed for the Lunar New Year holidays.
Elsewhere, spot silver gained 2.8% to $80.57 an ounce. Spot platinum rose 2.3% to $2,117.66 while palladium added 2.3% to $1,723.25. All metals were poised to register weekly gains.
(Reporting by Pablo Sinha in Bengaluru )
