Gold inches up as dollar retreats

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The New Zealand dollar traded near a five-month high after weak USA inflation, retail sales and consumer sentiment figures stoked talk the Federal Reserve may not raise interest rates for the third time this year.

USA consumer price index inflation was flat in June against expectations of a 0.1 percent increase, while the annual rate at 1.6 percent came in below consensus of 1.7 percent.

The New Zealand dollar was trading at 73.16 U.S. cents as at 5 pm from 72.84 cents late yesterday but was weaker versus last Friday in NY when it traded at 73.80.

Gold for August delivery was recently up 1% at $1,229.80 a troy ounce on the Comex division of the New York Mercantile Exchange. It was up 1.6pc for the week so far, which would be its biggest weekly gain since mid May.

Stock markets throughout Asia continued to gain ground on Friday, with investors anticipating relatively strong economic performances in both the US and the major Asian economies for the rest of the year.

After Yellen's initial testimony, said Goldman, they see "a 10% probability (vs. 20% previously) that the next rate hike comes in September, 5% in November and 55% (vs. 50% previously) in December". But the Fed and Ms Yellen have been waiting for this to happen for years, and it hasn't.

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Friday's "data reaffirms the delay", he said.

"We also expect iron ore and coal prices to edge lower, which should put some downward pressure on the AUD". USA gold futures for August delivery fell 0.2 percent to $1,214.80 per ounce. The contract finished the week up 1.5 per cent, its first gain in six weeks.

A weaker greenback boosts gold, making the dollar-priced commodity cheaper for investors holding other currencies.

However, Mr Bassanese believes while the RBA will be annoyed by the Aussie dollar's climb, it will keep the cash rate at a record low of 1.5 per cent for a while yet. "In order to turn neutral again we need to move back above that level", he said.

Meanwhile, SPDR Gold Trust slipped 0.43% to 828.84 tonnes on Thursday from 832.39 tonnes on Wednesday. The LBMA said it expected IBA to take over the LBMA Silver Price in autumn this year, confirming a Reuters report.

"A move above US$16.20 could trigger quite a bit of accelerated buying from the funds", he said. Platinum rose 1.68 per cent at US$916.65 per ounce, set to end the week up 1.5 per cent.

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