PRECIOUS-Gold gains on dollar dip, while focus turns to inflation

  • 6/25/2021
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* Gold may break support at $1,769/oz - technicals * Gold struggling from Fed’s hawkish blow - analyst * Palladium, platinum head for best week since mid-March (Updates prices) June 25 (Reuters) - Gold rose on Friday and was heading for its first weekly gain in four as a preliminary deal on U.S. infrastructure spending drove a dollar retreat, while investors awaited inflation data. Spot gold gained 0.4% to $1,782.74 per ounce at 1106 GMT, and was up over 1% for the week. U.S. gold futures were 0.4% higher at $1,782.90. While the weaker dollar is helping, gold is struggling to regain investor confidence after last week’s U.S. Federal Reserve meeting, Commerzbank analyst Daniel Briesemann said. A surprise hawkish tilt from the Fed had driven a sharp slide in bullion. However, the spending plan should be positive for gold, as it has to be financed to a large extent with higher debt, Briesemann added. Progress on the plan weighed on the dollar index, making gold cheaper for those holding other currencies, ahead of U.S. producer price data that could paint a clearer picture on rising inflation. But investors in gold, considered an inflation hedge that also benefits from a lower interest rate environment since it translates into reduced opportunity cost of holding bullion, were still trying to process mixed signals from the Fed. Two Fed officials warned on Thursday that inflation could rise more than policymakers’ expectation near term, after Fed chief Jerome Powell said it would not be the only determinant of interest rate decisions. UBS analyst Giovanni Staunovo said platinum has also come under pressure, further dampened by its lower liquidity compared to gold and concerns that rate hikes could slow economic growth. Platinum advanced 0.9% to $1,101.64 per ounce, while palladium fell 0.74 % to $2,620.61. Silver rose 0.8% to $26.15. (Reporting by Arundhati Sarkar in Bengaluru; editing by Alexander Smith and Jason Neely) Our Standards: The Thomson Reuters Trust Principles.

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