Gold prices set for weekly gain as dollar slides

May 27, 2022: Gold prices rose on Friday as the dollar continued to weaken, and helped put bullion on track for a second straight weekly rise amid cooling bets for a more aggressive Federal Reserve monetary policy.

Spot gold was up 0.3% at $1,855.12 per ounce, by 0544 GMT. U.S. gold futures were up 0.2% at $1,851.00. For the week so far, bullion is up 0.5%.

Gold this week has been supported by a moderation somewhat in market expectations from the Fed's monetary policy for next year, and most importantly the weaker U.S. dollar, said Ilya Spivak, a currency strategist at DailyFX.

There is price support at $1,830 on the downside and on the topside, the next key level is around $1,885, Spivak added.

Minutes of the Fed's May 3-4 policy meeting released on Wednesday highlighted, as the market expected, that most participants favour additional 50 basis point rate hikes at the June and July meetings.

Higher short-term U.S. interest rates and bond yields raise the opportunity cost of holding bullion, which yields nothing.

The dollar index fell en route to a second straight weekly decline, making bullion less expensive for buyers holding other currencies.

"We need a clearer signal that hard economic data is turning sour for the Fed to even think about a pause (in tightening)... hence gold investors are still reluctant to push the envelope significantly higher," said Stephen Innes, managing partner at SPI Asset Management.

"If the Fed signals a pause, then gold will move much higher, but until they do so, we could be range trading for a bit."

Spot silver climbed 0.7% to $22.14 per ounce and has gained about 1.7% so far this week.

Platinum was up 0.3% at $952.95. Palladium gained 0.5% to $2,024.52 and was set for a weekly gain of about 3.1%, its most since early April.

Reuters