Gold Prices Head Lower as Sentiment on Dollar Turns Positive

Investing.com – Gold prices fell Friday but were set to clinch their biggest weekly win in nearly two years despite a rebound in the greenback from three-year lows.

for April delivery on the Comex division of the New York Mercantile Exchange fell by $5.70, or 0.42%, to $1,349.70 a troy ounce.

In the wake of a rebound in the dollar, gold prices fell but remained well supported as traders continued to mull over the impact of rising inflation on the precious metal.

Dollar-denominated assets such as gold are sensitive to moves in the dollar – A fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal.

Some say that rising inflation, supporting expectations for further Federal Reserve rate hikes will weighed on the precious metal as it gets dumped for interest-bearing assets like bonds. Others, however, suggested that gold provides a hedge against inflation, so tends to garner attention in an inflationary environment.

Also supporting gold prices was an uptick in Far East demand as the Chinese New Year got underway which usually ushers in gift buying in the form of gold jewellery, which accounts for roughly 50% of total gold demand.

“Based on the local premiums to international gold prices, it appears that demand ahead of the Chinese New Year has been relatively strong,” Capital Economics analyst Simona Gambarini said earlier this week in an email to clients.

In other precious metal trade, fell 1.23% to $16.59 a troy ounce, while gained 0.35% to $1,002.60 an ounce.

rose 0.31% to $3.25, while fell 0.62% to $2.57. The fall in natural gas comes despite EIA data showing storage levels fell last week confounding expectations for a rise.

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