Gold set for third weekly fall on firm dollar, hawkish Fed

Gold prices inched up on Friday, but were headed for a third consecutive weekly decline, pressured by a firm dollar and a hawkish U.S. Federal Reserve that has dampened hopes for near-term rate cuts.

FUNDAMENTALS

* Spot gold firmed 0.2% to $4,657.50 per ounce as of 0112 GMT. Bullion has lost more ‌than 7% so ⁠far ⁠this week.


* U.S. gold futures for April delivery rose 1.1% to $4,657.90.

* The dollar strengthened, making greenback-priced bullion more expensive for holders of other currencies.

* Oil prices stayed above $105 a barrel after touching $119 on Thursday, as Iran attacked energy targets overnight in the Middle East.

* U.S. President Donald Trump told Israel not to repeat its strikes on ⁠Iranian natural ‌gas infrastructure after tit-for-tat attacks on energy facilities sent prices surging, escalating the U.S.-Israeli war with Iran.

* Iran's military ⁠said the attacks on Iran's energy infrastructure marked "a new stage in the war", prompting it to target energy sites linked to the United States.

* The closure of the Strait of Hormuz kept crude elevated, adding to inflationary pressures by pushing up transport and manufacturing costs. While rising inflation typically boosts gold's appeal as a hedge, high interest rates curb demand for the ‌non-yielding asset.

* Most major developed market central banks kept rates unchanged this week, but signalled they were ready to tighten further if the energy-driven ⁠inflation shock persists.

* Interest rate futures show traders see little chance of a Fed reduction this year, according to the CME's FedWatch tool.

* Analysts at OCBC said the medium-term outlook for gold stays constructive, but near-term price action is likely to stay choppy.

* Spot silver gained 0.1% to $73 per ounce. Spot platinum rose 0.1% at $1,972.80 and palladium added 0.4% to $1,452.21.

DATA/EVENTS (GMT)

0100 China Loan Prime Rate 1Y, 5Y Mar

1000 EU Total Trade Balance SA Jan