LONDON: Gold prices rose to a six-week high on Friday after weaker than expected US inflation dampened expectations that the US Federal Reserve will aggressively raise interest rates.

Data on US second quarter gross domestic product (GDP) and labour costs also pushed the dollar lower, making bullion more expensive for holders of other currencies. “It showed a big fall in annual inflation rates across the board so there is no urgency for the Fed to raise interest rates,” said Commerzbank analyst Carsten Fritsch.

Spot gold was up 0.5 per cent at $1,264.30 an ounce at 1320 GMT after touching $1,266.84, the highest since June 14, just after the data was released.

Gold is sensitive to rising rates because they push up bond yields, making non-yielding gold less attractive, and tend to boost the dollar.

It was on track to rise for a third week in a row. US gold futures for August delivery were 0.3pc higher at $1,263.20 an ounce. US bond yields were largely flat, while global share prices were down.

Silver was up 0.8pc at $16.66 an ounce, on track for a third weekly gain. Platinum was 0.9pc higher at $930.50 an ounce but set for its first weekly decline in three. Palladium was up 0.1pc at $873 after touching a one-month high on Thursday, and has gained 3.3pc this week.

Published in Dawn, July 29th, 2017