Gold prices are rising for a third straight session on Friday. Spot price reached the mid-September high of $1,333.08, up 0.7% on the day and is set for a fifth straight week of gains. Since December 1 the metal has climbed almost 4%. A widespread weakness in dollar is the key driver behind the current bullish rally in gold.
Judging by the persistent USD selloff, the precious metal has the potential for further gains, though there is a risk of local corrections due to some overbought signals. The greenback is under substantial pressure against most major currencies, and the bearish mood intensified after yesterday’s data showed the U.S. producer prices fell for the first time since August 2016. The report added to concerns that the Fed won’t hike three times this year while other major central banks are set to tighten this year.
If gold manages to hold its gains, spot prices will focus on the immediate resistance level at $1,334.30, while the next bullish hurdle is expected at $1,340. This barrier may dent the buyers’ enthusiasm and sent the precious metal in the correction mode.