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Gold up, set for weekly gain as dollar weakens

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AP

Gold rose overall on Friday, headed for its first weekly gain in four weeks, as the dollar weakened and investors grew a bit less confident about prospects that the Federal Reserve would raise interest rates three more times in 2018.

Although spot gold was down 0.1 percent at $1,3120 per ounce by 3 p.m. ET, it touched its highest since April 25 during the session at $1,325.96, nudging its 100-day moving average of $1,326. It was up 0.5 percent for the week so far.

U.S. gold futures for June delivery settled down $1.60 at $1,320.70.

"Geopolitical risks in the Middle East, a weaker dollar and softer Treasury yields are giving gold a temporary boost," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.

The dollar fell for a third day on Friday against a basket of currencies. A weaker dollar makes gold more attractive for investors using other currencies.

While the 10-year U.S. Treasury yield rose slightly, it remained below 3 percent.

Bond market investors remain confident the Fed will hike rates in June, but less sure of prospects for rate hikes in September and December. Fewer U.S. interest rate hikes would lower the opportunity cost of holding non-interest bearing bullion.

St. Louis Federal Reserve Bank President James Bullard said aggressive rate increases would risk nipping off U.S. business investment.

Gold price consolidation above resistance at the 100-day moving average might be a catalyst for more gains, MKS PAMP trader Tim Brown said.

Capital Economics' Simona Gambarini said the likelihood of three more Fed interest rate hikes this year would probably pressure gold prices into ending 2018 at $1,300.

Gold is considered a safe asset in uncertain times, but traders said tensions in the Middle East provided limited support now.

"Geopolitical concerns are still a concern but investors aren't paying significant attention," Think Markets chief markets analyst Naeem Aslam said. "The dollar story is more prominent."

A summit between the United States and North Korea to be held in Singapore eased fears of conflict.

Silver was flat at $16.68, above its 100-day moving average and nearing its 200-day moving average to $16.84. It was at 2-1/2-week highs, set for a weekly gain of 1.3 percent.

Platinum was down 0.38 percent at $920.50, having hit its highest since April 25 at $929.10. It was poised for a nearly 2 percent weekly increase.

Palladium declined 1.2 percent at $968.97, but earlier hit $1,008.50, a 2-1/2-week high, closing the week more than 2 percent higher.