Gold hovered near the highest level in three months on Friday, as the strong selloff in the U.S. dollar helped demand on the metal as an alternative investment.
The precious metal climbed to a high of $1156.80 an ounce, while currently trading around $1153.14 from the session’s opening at $1154.87.
The yellow metal is meanwhile set for its third consecutive weekly gain and the steepest weekly advance in a month as it has gained more than 3 percent.
The dollar index fell to a bottom of 96.26 on Thursday, the lowest in nearly four months, while currently trading higher at 96.66, amid lower expectations the Fed would hike its interest rates next month.
Financial conditions have tightened significantly and the weakening global view could have “significant consequences” to the U.S. economy, Fed Dudley said on Wednesday.
The inverse relation between the dollar and gold has strengthened this week, noting that bullion has been very sensitive to the Fed’s monetary expansion prospects.
The BoJ adopted negative interest rates, ECB may boost its stimulus in March and the BoE slashed U.K. growth forecasts and warned of risks stemming from emerging markets.
With key central banks still easing their monetary policy and the Fed likely to adopt a cautious pace of rate hikes this year, gold should advance further.
It seems that the yellow metal has found some support from physical demand this week, ahead of the Lunar New Year in China that will start on February 7.
Investors will focus later today on the awaited U.S. jobs report, which may signal the creation of 189,000 jobs in January, where unemployment probably stood at its record low of 5 percent.
