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PRECIOUS-Gold firms on dollar retreat, but still on track for monthly drop

reuters.com · 04/29/2022 06:31
PRECIOUS-Gold firms on dollar retreat, but still on track for monthly drop

Gold seeing fresh momentum from technical buying-analyst

Dollar set for best monthly performance since 2015

Silver, platinum set for monthly falls

Updates prices

By Eileen Soreng

- Gold prices rose more than a 1% on Friday, boosted by a pullback in the dollar, although bullion was headed for a monthly drop as aggressive interest rate hikes by the U.S. Federal Reserve loom.

Spot gold XAU= rose 1.2% to $1,916.21 per ounce by 1144 GMT. But prices have lost about 1.1% so far this month, its first monthly drop since January.

U.S. gold futures GCv1 gained 1.3% to $1,916.60 per ounce.

"The dollar strengthening early in the week was a major driver for the gold weakness, and as we've seen the dollar reverse ... that is clearly lending some support to gold," Saxo Bank analyst Ole Hansen said, adding that bullion is also seeing fresh momentum from a technical buying perspective.

Drivers of gold such as diversification, volatility in stocks and bonds as well as the risk of economic growth slowing have not moved away, Hansen said.

Also lifting the safe-haven metal's appeal, data showed the U.S. economy unexpectedly contracted in the first quarter amid a resurgence in COVID-19 cases and drop in pandemic relief money from the government. nL2N2WP2ZV

The dollar index =USD slipped 0.6% after touching a 20-year high on Thursday, making gold cheaper for holders of other currencies. USD/

Markets focus is now on the U.S. central bank's two-day policy meeting starting on May 3, when officials are expected to increase the target policy rate by half a percentage point. nL2N2WQ1VA

Fed officials have aligned around plans to accelerate the pace of interest rate hikes this year, but remain split over what could be the make-or-break decision of where to stop to avoid dragging the economy into recession.

Expectations of faster U.S. rate hikes have boosted bond yields and the dollar, increasing the opportunity cost of holding zero-yield bullion.

Spot silver XAG= rose 1.4% to $23.45 per ounce, platinum XPT= advanced 1.2% to $930.31. Both metals were still set to post a monthly fall.

Palladium XPD= rose 2.5% to $2,287.98 per ounce.

(Reporting by Eileen Soreng in Bengaluru; Additional reporting by Swati Verma; Editing by Amy Caren Daniel and David Evans)

((eileen.soreng@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuters.net))