Gold flat as strong dollar offsets safe-haven demand

by Jonathan Adams
Gold futures

Spot gold was at $2,032.76 per ounce, and U.S. gold futures were flat at $2,047.70 per ounce

Gold prices were flat in light trading on Friday with Chinese markets closed for the Lunar New Year break, while a strong dollar offset safe-haven demand fuelled by Middle East concerns.

Spot gold was at $2,032.76 per ounce, as of 0404 GMT. Bullion has dropped 0.3% so far in the week.

U.S. gold futures were flat at $2,047.70 per ounce.

China’s Shanghai Futures Exchange is closed from February 9 to 16 for the Lunar New Year holidays.

Some stress in U.S. regional banks, Chinese new year demand and Middle East tensions put a floor on the metal, according to Hugo Pascal, a precious metals trader at InProved.

Concerns lingered about the Middle East as Israeli Prime Minister Benjamin Netanyahu rejected a truce proposal.

The dollar index and 10-year Treasury yield were both set for a weekly gain.

Focus will shift next week to a U.S. CPI report after Federal Reserve officials said they would hold off on cutting interest rates until they had more confidence that inflation was headed down to 2%.

Traders have pared bets for a rate cut in May.

Spot palladium prices dropped below those of platinum for the first time since April 2018 on Thursday. However, palladium has since taken a lead again, up 0.6% to $892.26 per ounce, while platinum increased to $890.09.

Both metals have been under pressure as consumers drew down inventories.

However, palladium will be harder hit on increasing electric vehicle sales, because of its limited uses elsewhere, analysts at ANZ Research wrote in a note.

Both metals are used in making a key component in internal combustion engines, but platinum is also used in jewellery and other industries.

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