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“The dollar strengthening early in the week was a major driver for the gold weakness, and as we’ve seen the dollar reverse … that is clearly lending some support to gold,” Saxo Bank analyst Ole Hansen told Reuters, adding that bullion is also seeing fresh momentum from a technical buying perspective.
Also lifting the safe-haven metal’s appeal, data showed the US economy unexpectedly contracted in the first quarter amid a resurgence in covid-19 cases and drop in pandemic relief from the government.
The dollar index slipped 0.6% after touching a 20-year high on Thursday, making gold cheaper for holders of other currencies.
Still, bullion is headed for a monthly drop with aggressive interest rate hikes by the US Federal Reserve looming.
Markets focus is now on the US central bank’s two-day policy meeting next week, when officials are expected to increase the target policy rate by half a percentage point.
Fed officials have aligned around plans to accelerate the pace of interest rate hikes this year, but remain split over what could be the make-or-break decision of where to stop to avoid dragging the economy into recession.
(With files from Reuters)
