Gold price set for best week in three months, near April highs

Written by Reuters | Singapore | Updated: Jun 20 2014, 17:42pm hrs
GoldSilver was little changed after jumping 4 percent in the previous session.
Gold price eased on Friday on profit taking after posting its biggest one-day rise in nine months, but the safe-haven metal was trading near April highs and set for its best week in three months on geopolitical tensions and a softer dollar.

Gold posted its biggest jump since September on Thursday, as technical buying picked up on tensions in Iraq and was supported by the Federal Reserve's lack of commitment to raise interest rates.

"The move is largely short covering, but the investment buying interest is not aggressive," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"Geopolitical tensions and a softer dollar have prompted some to cover their short positions. But this is unlikely to last."

Spot gold fell 0.7 percent to $1,310.90 an ounce by 0243 GMT, after jumping 3.3 percent in the previous session, when it hit mid-April highs of $1,321.70. The metal has gained about 3 percent for the week.

"We see a convincing break above the $1,300 level as likely to introduce further buying from momentum investors," HSBC analysts wrote in a note.

The dollar came under pressure this week after the U.S. Federal Reserve's comments that it could keep interest rates low in the longer term.

Physical demand for gold was soft. Traders said what little demand they had seen earlier in week had been erased by Thursday's price jump.

"Demand was slightly better when prices had steadied around $1,270 but with this move above $1,300, we have seen a pull back," said a trader in Hong Kong. In a sign of weaker demand, Chinese gold prices fell to a discount to the global benchmark. Private sector gold demand in China, which last year surpassed India to become the biggest consumer of the yellow metal, will be flat to slightly lower this year, an official from the China Gold Association said on Thursday.

Among other precious metals, silver was little changed after jumping 4 percent in the previous session, while platinum group metals also eased after sharp overnight gains.