LONDON: Gold rose to a four-month high on Friday and was on track for a fifth straight weekly gain as the dollar fell against the euro on an agreemement for a political coalition in Germany.
Spot gold rose 0.7 percent to $1,331.62 an ounce by 1102 GMT, having touched its highest since Sept. 15 at $1,333.02. The precious metal is up 0.9 percent this week and set for its longest run of weekly gains since April.
US gold futures were up 0.7 percent at $1,332.30. The dollar index , which measures the greenback against six major currencies, fell to its lowest since Sept. 11 at 91.308.
The euro jumped to a three-year high after party sources said that German Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) had agreed a blueprint for formal coalition negotiations. “This agreement of a coalition will change that situation of a hung parliament in Germany and that is why the euro is positive, weakening the US dollar, which is one of the reasons why gold is firmer this morning,” said Quantitative Commodity Research consultant Peter Fertig.
Friday’s news from Germany helped the euro to extend gains made on Thursday after minutes from a December European Central Bank meeting signalled that the ECB could begin to wind down its 2.5 trillion euro ($3 trillion) stimulus program this year. A stronger euro potentially boosts demand for gold by making dollar-priced bullion cheaper for European investors. “There was some strong buying out of China on Friday suggesting some physical demand ahead of Lunar New year,” said Stephen Innes, APAC head of trading at Oanda.
The dollar was pressured by data showing that producer prices in the United States fell for the first time in nearly 1-1/2 years in December amid declining costs for services. US Consumer Price Index (CPI) data is due later on Friday.
Among other precious metals, spot silver rose 0.9 percent to $17.13 an ounce, heading for its first weekly loss in five weeks. Silver is up 0.6 percent so far this week. Platinum rose 1 percent to touch its highest since Sept. 11 at $997, on track for a fifth straight weekly gain. Platinum is up 2.5 percent so far this week. Palladium was up 0.4 percent at $1,087.93 after dropping on Thursday to a more than one-week low at $1,075.50.
Gold price hits four-month high as dollar slumps
Gold price hits four-month high as dollar slumps
