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Gold dips on profit taking as analysts predict a rebound

Key Points
  • Spot gold may break above a resistance at $1,296 - technicals.
  • Platinum heads for first weekly decline in four.
  • Palladium holds near two-week high hit on Thursday.

Gold prices dipped on Friday as some investors locked in profits at the end of the week, but there are expectations that they could move higher next week.

Spot gold was down 0.21 percent at $1,288.1801 per ounce by 10:34 a.m. ET, with the price down 0.3 percent for the week.

U.S. gold futures for December delivery dipped 0.33 percent to $1,287.90.

"I think gold will move back towards $1,300 next week or the week after, maybe on the back of dollar weakness," said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam.

"There are still some longs in the market, so there's more technical momentum as they try to push prices up again to see what happens in the last weeks of the year."

Boele said gold was supported by the release of the U.S. Federal Reserve's minutes on Wednesday, regarded as "dovish" and which lowered market expectations slightly of a March rate hike.

A December rate hike has already been priced in. "Investor appetite (for gold) is low even after slightly more dovish-than-expected Fed minutes. There just has not been enough to entice investors back into the market in great amounts," ANZ analyst Daniel Hynes said.

The Fed's cautious view of inflation could lead to a longer period of low interest rates which provides a solid platform for gold investment, said Cameron Alexander, an analyst with Thomson Reuters-owned metals consultancy GFMS.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

The buying of physical gold remained thin in major Asian centers this week as higher prices dented demand, though seasonal demand was expected to boost activity in top consumer China next month.

Among other precious metals, silver added 0.26 percent to $17.01 an ounce and platinum gained 0.74 percent to $940.10 an ounce.

Palladium dipped 0.74 percent to $1,004 an ounce after hitting a two-week high of $1,013.70 in the previous session.

"I would be very careful with palladium, especially at these levels with the market long," Boele said. "The fundamentals are good, but I still think it's overpriced."

Silver slipped 1.1 percent for the week and is poised for its first weekly decline in three. Platinum lost 0.9 percent, on track for its first weekly fall in four. Palladium climbed 0.9 percent, its first weekly rise in three.