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Gold rises as dollar weakens, heads for second weekly gain

Published 19/09/2020, 01:47 am
© Reuters.
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* Spot gold up 0.6% for the week

* Dollar falls 0.1%

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (New throughout, updates prices, market activity and comments)

By Sumita Layek

Sept 18 (Reuters) - Gold prices rose on Friday, en route to a second straight weekly gain, as the dollar weakened and on concerns about economic recovery from the coronavirus crisis.

Spot gold XAU= rose 0.6% to $1,953.72 per ounce at 1:52 p.m. EDT (1752 GMT), and was up 0.6% so far this week. U.S. gold futures GCv1 settled up 0.6% at $1,962.10.

"We're seeing a slightly weaker dollar. Gold prices should do better because the dollar will continue to weaken," said Edward Meir, an analyst at ED&F Man Capital Markets.

"The path of least resistance is upwards because of the Fed, all the stimulus coming from global central banks (and) more fiscal stimulus if there's deal in Washington; all the tailwinds are pointing in the direction for higher prices."

The dollar .DXY fell 0.1% against rivals, making gold cheaper for holders of other currencies. USD/

The U.S. Federal Reserve vowed on Wednesday to keep interest rates near zero for a long time, while the United States considered a proposed $1.5 trillion coronavirus aid bill. interest rates, which reduce the opportunity cost of holding non-yielding bullion, and widespread stimulus measures have helped gold gain over 28% this year as it is seen as a hedge against inflation.

"We believe the balance of risks remains to the upside for gold and expect prices to average $2,000 per ounce in Q4-2020 and $2,125 next year," said Standard Chartered (LON:STAN) analyst Suki Cooper.

"Barring short-term corrections, negative real yields and a weaker dollar, alongside the unprecedented stimulus, create a favourable macro environment for gold and are likely to be the key price drivers over the coming months."

Elsewhere, silver XAG= fell 0.8% to $26.88 per ounce, while platinum XPT= dropped 1.3% to $928.51 and palladium XPD= rose 1.1% to $2,360.26.

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