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Gold futures rise on weaker U.S. dollar

Xinhua, January 21, 2017 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose Friday on weakness in the U.S. dollar and uncertainty surrounding Donald Trump's presidency.

The most active gold contract for February delivery

rose 3.4 U.S. dollars, or 0.28 percent, to settle at 1,204.90 dollars per ounce.

Gold was clobbered Thursday as the dollar gained on the combination of inaction on interest rates from the European Central Bank and relatively hawkish comments from Federal Reserve chief Janet Yellen this week.

On Friday, uncertainty surrounding the early presidency of Trump hovered over financial markets. Trump recently suggested he favored a weaker dollar and his Treasury secretary pick, Steven Mnuchin, worked hard Thursday to clarify that stance.

The U.S. dollar index, which measures the greenback against a basket of currencies, fell 0.4 percent after trading higher earlier in the session. A weaker dollar makes the metal cheaper for holders of other currencies.

Gold shrugged off better-than-expected U.S. jobs, housingand factory data that reinforced the view that the U.S. economy is sufficiently robust to warrant interest rate rises.

Philadelphia Federal Reserve President Patrick Harker said on Friday he expected three interest rate increases in 2017 if the labor market improves further and inflation moves to the Federal Reserve's 2 percent goal. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.

"It will take some time for the Trump administration to begin enacting its economic policies and for them to take effect," Brien Lundin, editor of Gold Newsletter, said. "In the meantime, the markets will be looking for any hints of what's to come."

"So far, Trump and his advisors and appointees have given indications that they' ll favor a weaker dollar. This is bullish for gold, and investors should look for any further hints that they' ll lean in this direction," he added.

Silver for March delivery rose 3 cents, or 0.18 percent, to close at 17.032 dollars per ounce. Platinum for April delivery added 19.6 dollars, or 2.05 percent, to close at 976 dollars per ounce. Endit