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Gold ends up as US rate bets buoy dollar

Gold
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Gold futures ended higher on Friday as chart levels were broken, but it was pressured by a stronger dollar and renewed expectations for a U.S. rate hike this year.

U.S. gold for June delivery settled up 0.9 percent at $1,204.60 an ounce. Spot gold was last up 1.15 percent to $1,208 an ounce. Flat initially, it gained momentum after a break of technical resistance at $1,196 that triggered automatic buy orders.

"This move is coming during a week when we didn't really have any gold-positive news but ...the way gold is putting up a fight at the moment is potentially giving some confidence to the market," Saxo Bank senior manager Ole Hansen said.

"But to make headwinds above the resistance area around $1,225 we need to see some real buying coming in."

Bullion was however still down around 0.3 percent for the week, having pulled back from Monday's seven-week top of $1,224.10 that was triggered by last week's weak U.S. employment report.

"We saw a technical move this morning that pushed prices above $1,200... but if we see some selling into the rally perhaps we can come back down again," Mitsubishi Corp strategist Jonathan Butler said.

"Looking at the slightly longer-term chart, (prices are) still heading for a weekly fall ... (after) what we heard at the FOMC meeting, very much keeping the door open to a June rate rise."

Gold on Friday shrugged off the impact of a stronger dollar and higher global equities.

But the longer-term outlook is still bearish, traders said, and prices had surrendered gains after Federal Reserve officials suggested a June rate hike could still be in play.

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Investors tend to shun gold, which doesn't pay interest, when market expectations point to U.S. interest rates rising.

Gold could drop to a five-year low of $1,100 this year due to the relative health of the U.S. economy compared to Europe and emerging markets, GFMS analysts at Thomson Reuters said.

Gold buying in Asia was slow this week as firmer spot prices turned off buyers, especially in China, and a potentially weak monsoon threatened demand in India.

Premiums for physical gold at the Shanghai Gold Exchange stood at a modest $1-$2 an ounce over the global spot benchmark on Friday.