Gold price heads for best week since July

London (Sept 24)  Gold edged back toward the previous session’s two-week highs on Friday and stayed on track for its biggest weekly gain in nearly two months, after the US Federal Reserve sounded a cautious note on the pace of interest rate hikes.
The Fed signalled an increasingly careful approach to future rate hikes after a policy meeting on Wednesday, reassuring investors who had feared the US central bank could move more quickly to tighten monetary policy.
Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Spot gold was up 0.2 percent at $1,338.36 an ounce at 1400 GMT, and was more than 2 percent higher on the week, its best weekly performance since late July. The metal has been boosted by the Fed moving in a more dovish direction, ABN Amro analyst Georgette Boele said.
“But in the end everyone realizes that (a December hike) will likely happen, so it is too dangerous to push gold prices above the previous peak for now,” she added.
A steadier tone to the dollar after hefty losses earlier this week pulled gold back from the previous session’s peak of $1,343.64. The dollar stabilized against a basket of currencies .
Stock markets, despite some weakness on Friday, were also on course for their biggest weekly gain in two months after a week of central bank meetings that left investors still unconvinced of US policymakers’ intent to put an end to an era of ultra-low interest rates. ING analyst Hamza Khan said the Fed had been following a pattern of talking up a rate cut ahead of its policy meetings, but failing to deliver.

Source: ArabNews