Gold prices on Friday were trading modestly higher but on track for a modest weekly decline, tracking moves in the strengthening U.S. currency which can weigh on U.S. dollar-pegged metals.
Bullion has been under some pressure as the dollar has attracted buying from investors looking for perceived havens amid rising global cases of COVID-19.
A stronger dollar is typically been a headwind for gold, which is priced in the U.S. unit, making bullion more expensive for overseas buyers when the dollar firms.
However, over the longer term, bullish precious metals investors are betting that gold will break out of a range around $1,900 as concerns about a resurgence of the pandemic grows and as fiscal and monetary stimulus increases—a felicitous environment for bullion to rally further, experts say.
“Rising figures of Covid-19 infections are increasing fears of more lockdowns with all the related consequences. In other words, the impending need for more monetary stimulus to mitigate the impact of the coronavirus-induced crisis is keeping investors’ gold appetite at its peak,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a note.
“That said, we should be cautious as at some point central banks will start to be more resistant in adding new stimulus, but this scenario is far from imminent,” he said.
December gold rose $6.10, or 0.3%, to $1,915 an ounce after rising less than 0.1% on Thursday. Prices Thursday had touched an intraday low of $1,892.70, highlighting fitful trade for bullion on the week.
Silver for December delivery, meanwhile, added 41 cents, or 1.7%, to reach $24.63 an ounce, after a 0.7% decline in the previous session.
For the week, however, gold is set for a 0.6% decline based on the most-active contract, according to FactSet data. Silver futures are looking at a weekly slide of 1.9%.
Meanwhile, the ICE U.S. Dollar Index, a gauge of the buck against a half-dozen major currencies, was up 0.6% for the week.