Gold Price rises above $1,200 on uncertainty over US rate hike

London (Apr 17)  Gold edged back above $1,200 an ounce on Friday but stayed on track for a second straight weekly drop as a run of downbeat U.S. data fueled uncertainty over the timing of a Federal Reserve rate rise.

Expectations the central bank would start raising rates in June have been reassessed after recent sluggishness in U.S. data. Many analysts are now betting that rates will not be raised until September.

Gold is sensitive to U.S. monetary policy, as rising rates would boost the dollar, in which the metal is priced, while lifting the opportunity cost of holding non-yielding bullion.

Spot gold was up 0.5 percent at $1,203.11 an ounce, while U.S. gold futures for June delivery were up $4.90 an ounce at $1,202.90.

"Expectation once again is for rate rises to be pushed out even later. September or October has been our base assumption for some time, but I've heard talk in the last couple of days of rate rises being pushed out to 2016," Mitsubishi analyst Jonathan Butler said.

"That's all positive for gold, but for the moment it's pretty rangebound either side of $1,200," he said. "The CPI figure out from the U.S. later today will be interesting. If inflation is persistently low, that may add further weight to the argument that the Fed is going to hold off raising rates."

The dollar fell back towards one-week lows on Friday, slipping for a fourth straight day.

Adding to the rates uncertainty were comments from Fed officials on Thursday that showed officials at odds over the timing of a move.

Physical buying in the world's top two gold-consuming countries remained slow this week. Premiums in China improved only slightly and those in India slipped as prices stabilized at $1,200 an ounce.

Silver was up 0.7 percent at $16.36 an ounce, while platinum was up 0.4 percent at $1,160.99 an ounce and palladium was up 0.2 percent at $776.70 an ounce.

Silver and platinum were headed for weekly declines, while palladium was poised for its third straight weekly gain.

Source: Reurters