Gold set for biggest weekly gain in over 2 months on dovish Fed

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Gold prices held near a two-week high on Friday, and were set for their biggest weekly gain in more than two months, on renewed signs that the U.S. Federal Reserve may not taper economic support and hike interest rates in the near term.

Spot gold was steady at $1,827.70 per ounce, as of 0053 GMT, after having hit its highest since July 15 at $1832.40 on Thursday. Bullion was on track for its biggest weekly gain since May 21, having risen 1.5% so far.

U.S. gold futures eased 0.2% to $1,827.70 per ounce.

The dollar index was steady at a one-month low hit in the previous session, after the U.S. central bank said the job market still had “some ground to cover” before it would pull back on monetary stimulus.

A weaker dollar makes gold cheaper for holders of other currencies.

Data on Thursday showed the U.S. economy grew solidly in the second quarter, but fell short of analysts expectations.

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6% to 1,031.46 tonnes on Thursday, marking the first inflow in about a month.

Gold prices will average a little above their current level of $1,830 an ounce for the remainder of 2021 before edging lower next year as the global economy recovers and central banks begin to tighten monetary policy, a Reuters poll showed on Thursday.

Another poll showed that analysts revised up their forecasts for palladium, with a chronic shortage of the metal used to reduce harmful engine emissions expected to keep prices close to record levels.

Silver dipped 0.3% to $25.46 per ounce, palladium rose 0.4% to $2,655.21, while platinum fell 0.7% to $1,053.47.

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