Gold jumped to a near six-year high on Friday, surpassing the key $1,400 U.S. level before shedding some gains, but bullion was headed for its best week in more than three years on dovish signals from major central banks and rising tensions in the Middle East.
Weaker dollar, falling yields and tensions in the Middle East have lifted the precious metal by nearly 4% so far this week - its biggest since the week ended April 29, 2016, and also set for a fifth consecutive weekly rise.
Spot gold climbed 0.3% at $1,391.50 U.S. per ounce Friday morning, after earlier hitting its highest since Sept. 4, 2013 at $1,410.78.
U.S. gold futures were steady at $1,396.30 U.S. an ounce.
The Fed said this week it was ready to battle growing global and domestic economic risks, hinting at interest rate cuts beginning as early as next month.
With the Fed possibly easing its policy soon, and other central banks such as the European Central Bank (ECB) and the Bank of Japan likely to follow in their wake, government bonds were on a bullish footing.
Since Wednesday, bullion has risen as much as $70 after Fed’s dovish comments and increased Middle East tensions, after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington.
Among other precious metals, silver fell 0.8% to $15.29 U.S. per ounce.
However, the metal was on track for its biggest weekly percentage gain this year.
Platinum was up 0.4% to $805.99 U.S. per ounce. Palladium edged 0.1% higher to $1,479.36 an ounce and was headed for a third consecutive weekly gain.
