Gold Firms in Hope of U.S. Rate Cut

Gold prices held steady on Friday after rising above $1,280 in the previous session as weak U.S. data pushed the dollar off two-year highs and reignited hopes of a rate cut by the U.S. Federal Reserve this year.

Spot gold was steady at $1,283.21 U.S. per ounce early Friday morning, after rising as much as 1.1% to a one-week peak of $1,287.23 in the previous session. The metal has risen 0.5% so far this week.

U.S. gold futures for June were down 0.2% at $1,283.10.

The U.S. dollar retreated after hitting its highest level in two years as weak domestic data and the potential economic fallout from the trade war with China increased expectations for an interest-rate cut this year.

While the expectations of a rate cut is good for gold, prices can go higher only if the metal can break above $1,290-$1,300 U.S. range with the dollar still being strong.

Lower interest rates tend to lift gold as it reduces the opportunity cost of holding the non-yielding bullion.

However, gold has been under pressure of late as investors preferred the U.S. dollar amid intensifying U.S.-China trade tensions. The bullion is down nearly 5% since touching a 10-month peak in February at $1,346.73 U.S.

Among other precious metals, silver fell 0.1% to $14.54 U.S. per ounce, while palladium edged 1% higher to $1,324.35. Palladium was on track for a 1.1% weekly gain, its first in four weeks.

Platinum rose 1.5% to $805.00 U.S. an ounce, having touched its lowest since Feb. 15 at $791 in the previous session. Platinum was heading for its fifth straight weekly loss.