METALS : Gold Little Changed as Rate Worries Remain

By Amrith Ramkumar and David Hodari

A declining dollar boosted gold and other metals for the second straight session Friday, but the yellow metal erased its slight early gains as worries about higher interest rates continued to hinder its momentum.

Front-month gold for May delivery declined 0.1% to $1,319.00 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have stayed between about $1,305 and $1,360 this year, moving within that range based on swings in the U.S. currency, worries about higher interest rates and safe-haven demand.

A weaker dollar makes gold and other commodities denominated in dollars cheaper for overseas buyers. On Friday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, dropped 0.1%. The dollar hitting its highest level of the year earlier in the week had pressured gold, but some analysts expect it to weaken moving forward as global growth momentum shifts back to other countries.

"The dollar's really behind a lot of commodities moves at the moment," said Geordie Wilkes, analyst at Sucden Financial Research.

Still, gold inched lower as the dollar bounced off its lows of the day, with some analysts still worried that higher interest rates will boost the currency and weigh on the metal.

Investors have been weighing mixed inflation data from earlier in the week and debating whether a surge in consumer prices could give the Federal Reserve a freer hand to raise interest rates more quickly, pushing up Treasury yields and making other assets including gold less attractive.

Some investors think gold can still perform well even as rates rise, as long as inflation also picks up gradually. Some money managers use the precious metal to hedge against a pickup in inflation and downturn in other markets.

"The pressures in my mind are very much to the upside," said George Milling-Stanley, head of gold strategy at State Street Global Advisors.

Analysts will be closely monitoring conflict in the Middle East and the impact of U.S. sanctions on Iran, as geopolitical worries have supported gold prices throughout the year.

Among base metals, front-month copper for May delivery inched up 0.1% to $3.0950 a pound. Prices are down 5.6% in 2018 after hitting a nearly four-year high in late December, but some investors see steady economic growth and longer-term supply deficits supporting prices.

Write to Amrith Ramkumar at [email protected] and David Hodari at [email protected]