February 16, 2018
PRECIOUS-Gold prices heading for biggest weekly gain in nearly 2 years
(Reuters) - Gold prices edged higher on Friday, heading for their biggest weekly percentage gain in nearly two years, buoyed by a weaker U.S. dollar and as investors looked to hedge against inflation.
Spot gold rose 0.4 percent to $1,358.74 an ounce at 0429 GMT, after touching a three-week high of $1,359.47.
The metal is up more than 3 percent this week, set for its best weekly performance since the week ended April 29, 2016.
U.S. gold futures climbed 0.5 percent to $1,361.60 per ounce.
Spot gold has gained 4 percent from a one-month low of $1,306.81 last week, mostly on a weaker dollar.
"Gold has risen this week mainly due to a weaker dollar and physical buying ahead of Chinese New Year," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services.
"Also, the market is starting to fall in love with inflation trades again. Gold could be the standout performer this year if that's the case though some wearing off can come once the seasonal buying is done," Kumar said.
The dollar languished near a three-year low against a basket of currencies on Friday , heading for its biggest weekly loss in two years, as a slew of bearish factors offset support for the greenback from rising Treasury yields amid firming inflation.
U.S. producer prices accelerated in January, boosted by strong gains in the cost of gasoline and healthcare. The Labor Department said its producer price index for final demand rose 0.4 percent last month after being unchanged in December.
In a second report, the Labor Department said initial claims for state unemployment benefits increased by 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10.
"A combination of rising inflation, coupled with slightly weaker U.S. growth readings and a struggling dollar should continue to provide gold with an element of support," INTL FCStone analyst Edward Meir said.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.29 percent to 821.30 tonnes on Thursday from Wednesday.
"Technically, the January 2016 high was $1,365 and the 2016 high was $1,375 ... If gold can clear both those levels, there is lot of room above," Gupta of Adroit said.
Among other precious metals, spot silver was up 0.2 percent at $16.91.
Platinum rose 0.6 percent to $1,006.90, after hitting its highest since Feb. 1 at $1,007.40.
Palladium was up 0.2 percent at $1,020. The metal has gained 4.5 percent this week, its best since week-ended Oct. 13.