Gold eyes best week since mid-Jan as traders gauge US rate hike path

Silver, Platinum and Palladium were also poised for weekly gains, with platinum on track for its best week since November

Gold prices rose on Friday and looked set to post their biggest weekly gain since mid-January, as the US dollar eased, while traders assessed prospects of further rate hikes by the Federal Reserve.

Spot gold was up 0.2 per cent at $1,838.84 per ounce, as of 0358 GMT, rising about 1.5 per cent so far in the week. US gold futures rose 0.2 per cent to $1,844.20.

Interest rate hikes to contain high inflation discourage investors from placing money in non-yielding assets such as gold.

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"There's been a little bit of position-squaring ahead of what is the main event risk left for the week, which is a bunch of different Fedspeak and the services ISM number," said Ilya Spivak, head of global macro at Tastylive.

The dollar index eased 0.1 per cent and was set for its first weekly loss since January, making bullion more affordable for buyers holding other currencies.

The impact of higher US interest rates on the economy may only begin to "bite" in earnest this spring, an argument for the Fed to stick with "steady" quarter-point rate increases, Atlanta Fed President Raphael Bostic said on Thursday.

The number of Americans filing new claims for unemployment benefits fell again last week, adding to fears that the Fed would keep hiking interest rates for longer. Another report on Thursday showed labour costs grew much faster than previously estimated in the fourth quarter.

If Fedspeak reinforces that interest rates could move higher still, then "gold could be in for a troubling end of the week", Spivak said.

Money markets expect the Fed's target rate to peak at 5.453 per cent in September, and chances of rate cuts this year have been largely priced out.

Spot silver rose 0.4 per cent to $20.98 per ounce, platinum added 0.3 per cent at $962.48 and palladium was up 0.2 per cent at $1,452.12.

All three metals were poised for weekly gains, with platinum on track for its best week since November.