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PRECIOUS-Gold set for best week in more than 3 months on stimulus bets

Published 24/07/2020, 02:40 pm
© Reuters.
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* Gold up more than 4% so far this week

* Silver slips, but headed for its best week in over three decades

* Spot gold may retest support at $1,880/oz - technicals (Updates prices)

By Brijesh Patel

July 24 (Reuters) - Gold was headed on Friday for its biggest weekly gain in more than three months as it held firm near a nine-year high, benefiting from a weak dollar and inflation expectations due to stimulus for virus-battered economies.

Silver eyed its best week since 1987, with additional impetus coming from bets for a revival in industrial activity.

Spot gold XAU= was up 0.3% at $1,893.21 per ounce by 0739 GMT, having hit its highest since September 2011 at $1,897.16 on Thursday.

Prices have risen more than 4% this week, putting gold on course for its longest winning streak since late 2011.

"The basic logic has to do with the introduction of further fiscal stimulus... in the European Union, and we're talking again about further fiscal stimulus in the United States," said DailyFx currency strategist Ilya Spivak.

"Interest rates are not really expected to go higher, and the likely response is seen as inflation."

Gold tends to benefit from widespread stimulus measures from central banks as it is perceived as a hedge against inflation and currency debasement. Sino-U.S. tensions also prompted investors to seek safety in bullion. China ordered the United States to shut its Chengdu consulate in retaliation for the closure of its consulate in Texas. helping gold, the dollar index .DXY held near a two-year low. USD/

U.S. gold futures GCv1 rose 0.2% to $1,893.60 per ounce.

Low physical demand has been forcing dealers in India and China to offer hefty discounts. GOL/AS

Spot gold may retest a support at $1,880 per ounce, Reuters technical analyst Wang Tao said. XAG= , which fell 0.4% to $22.63 per ounce, was up more than 17% for the week.

"Silver shares some 'safe haven' attributes with gold but is inherently more leveraged to global growth and manufacturing recovery... The rebound in global PMIs, particularly in China, is also supportive for silver," Citi analysts said in a note.

Platinum XPT= rose 0.3% to $907.88 and palladium XPD= gained 0.3% to $2,131.34.

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