Gold heads for first weekly gain in three as Fed hurts dollar

Gold heads for first weekly gain in three as Fed hurts dollar

"Whether folks agree or disagree with the need to hike, the key here is that the Fed has signaled to markets, and importantly U.S. and global businesses, that it is in control and the economy is moving as expected", said Greg McKenna, chief market strategist at AxiTrader, in a note.

Meantime, spot gold was was up 0.3% at $1,230.28 U.S.an ounce early Friday, taking its gains this week to 2%.

Japanese market futures were lower than the Nikkei 225's last close at 19,577.38: Futures in Chicago were down 0.52 per cent at 19,475 and Osaka futures fell 1.05 per cent to 19,370.

Trading in stock markets is cautious and the dollar is slightly weaker as investors look ahead to an expected interest rate increase by the Federal Reserve.

Data on Friday showed a steadily improving USA economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.

Dutch Prime Minister Mark Rutte's party won a parliamentary election victory over anti-Islam lawmaker Geert Wilders.

Holdings of SPDR Gold Trust fell 0.28% to 837.06 tonnes on Thursday from 839.43 tonnes on Wednesday. Investors had widely expected the rate increase.

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The two-year Treasury yield rose to 1.31% from 1.30%, and the 30-year yield rose to 3.13% from 3.11%. The benchmark one-year commercial lending rate was unchanged. It had plunged 0.11 percentage points the prior day, after the Fed threw cold water on speculation that it may get more aggressive in raising rates.

The S&P 500 index showed 41 new 52-week highs and no new lows, while the Nasdaq recorded 78 new highs and 25 new lows.

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (GLD), fell 0.28% on Thursday, the first outflow this week.

European stocks logged modest gains Wednesday, helped by advances for energy shares as oil prices were in recovery mode, while the results of the Dutch election and the Federal Reserve's policy meeting were on deck.

Excluding a modest drop in auto sales, retail sales rose by 0.2 percent in February after jumping by 1.2 percent in January. The number of workers filing for state unemployment benefits declined 2,000 to a seasonally adjusted 241,000 in the week ended March 11, the Labor Department said Thursday.

Expectations are such that markets will react badly if Fed chief Janet Yellen fails to deliver on a 0.25-point rate rise, or even if she signals too much Fed caution moving forward.

The pound dipped against the euro this week as the Brexit bill allowing the Government to trigger Article 50 passed through the Houses of Parliament with no amendments.

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