Gold steadies as dollar rally cools, set for worst week in sixGold steadies as dollar rally cools, set for worst week in six
FILE PHOTO: Gold bars are stacked in safe deposit boxes room of the ProAurum gold house in Munich

By Eileen Soreng

(Reuters) – Gold prices steadied on Friday as the dollar retreated and hopes for more U.S. stimulus measures resurfaced, although the precious metal was on track to post its steepest weekly contraction since August.

Spot gold was flat at $1,868.29 per ounce by 0627 GMT. But prices are down over 4% for the week pressured by a broadly stronger greenback.

U.S. gold futures were down 0.3% to $1,871.

The dollar index was off its two-month peak but was on track for its best week since early-April, up 1.5%, making gold more expensive for holders of other currencies.

“With the data front quiet, it appears that investors want to stay nimble and hedged by leaving their money in dollar, rather than moving to precious metals or U.S. bonds,” said Jeffrey Halley, a senior market analyst at OANDA.

Investors also grew hopeful after a lawmaker on Thursday said Democrats in the House of Representatives were working on a $2.2 trillion coronavirus stimulus package that could be voted on as soon as next week.

U.S. Federal Reserve policymakers, including chair Jerome Powell, made multiple public appearances this week calling on the U.S. government to provide more fiscal support.

Gold prices have climbed more than 20% this year as central banks worldwide rolled out massive stimulus and slashed interest rates to near-zero to counter the economic damage from the COVID-19 pandemic.

Given that the COVID-19 situation has not improved and interest rates are lower, gold is still bullish in the longer term, said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

“Support level for gold lies around $1,845 and resistance at $1,900.”

Silver fell 1% to $22.98 per ounce and platinum rose 0.8% to $855.41. Both metals are on track for their worst week since mid-March.

Palladium edged 0.4% higher to $2,234.42 per ounce.

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V, Rashmi Aich and Ramakrishnan M.)