Investing.com - Gold prices rose in Asia on Friday as a continued weaker dollar aided sentiment even in a holiday-thinned market.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose 0.10% to $1,356.70 a troy ounce. The US dollar index was last quoted down 0.49% to 88.47.
Today marks the start of the Year of the Dog, the latest turn in the 12-year lunar zodiac cycle with China, Hong Kong, South Korea, Taiwan, Indonesia, Singapore, Malaysia, Philippines and Vietnam markets shut.
Overnight, gold prices were mostly flat on Thursday with trading restricted to a narrow range as traders mulled over recent data pointing to growing inflationary pressure which could strengthen the Federal Reserve’s case for a faster pace of monetary policy tightening.
In what was mostly a range bound session gold prices struggled to capitalise on dollar weakness as traders grew wary of adding to recent bullish bets on the yellow metal after upbeat wholesale inflation reaffirmed the narrative of improving US inflation.
The Labor Department said Thursday its producer price index for final demand increased 0.4% last month after slipping 0.1% in December. In the 12 months through January, the PPI rose 2.2%.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal.
Also supporting gold prices was buying ahead of as the Chinese New Year got underway which usually ushers in gift buying in the form of gold jewellery. The biggest demand for gold is for use in gold jewellery which accounts for roughly 50% of total demand, according to the World Gold Council.