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Investing.com -- Gold inched down on Friday amid a stronger dollar, as a host of central banks appeared ready to inject fresh liquidity into their respective markets to boost a global economy beset by soft commodity prices and sluggish inflation.
On the Comex division of the New York Mercantile Exchange, gold for February delivery traded in a tight range between $1,094.50 and $1,103.10 an ounce before settling at 1,098, down 0.20 or 0.02% on the session. For the week, gained roughly 0.85% to post its second positive week over the first three weeks of the year. Since dipping below $1,050 to six-year lows in early-December, the precious metal has risen value by nearly 4%.
Gold likely gained support at $1,058.50, the low from December 31 and was met with resistance at $1,111.10, the high from Jan. 8.
One day after hinting the European Central Bank could approve added stimulus measures when it meets in March, ECB president Mario Draghi reiterated that the central bank has enough tools at its disposal in order to help boost inflationary pressures throughout the zone. Speaking at the World Economic Forum in Davos, Switzerland, Draghi also indicated the ECB could be ready to act if current economic conditions persist.
Draghi offered dovish comments on the possibility of further interest rate hikes in the near term on Thursday, after the ECB's Governing Council held its benchmark rate steady at a record-low of 0.05%. The ECB also left its deposit rate unchanged at minus 0.3%, one month after cutting it further into negative territory by 10 basis points.
"We have plenty of instruments and especially we have the determination and willingness and capacity of the Governing Council to act and deploy these instruments," Draghi said.
Also on the sidelines of the conference in Davos, China vice president Li Yuanchao emphasized that the People's Bank of China will continue to intervene in equity markets when such efforts are required to help reduce volatility. The Shanghai Composite index has tumbled more than 15% this year, as the Chinese economy trudges along at its slowest pace in a quarter century. Speaking exclusively to Bloomberg, Yuanchao also insisted that the PBOC has no intention of devaluing the yuan.
"The fluctuations in the currency market are a result of market forces, and the Chinese government has no intention and no policy to devalue its currency," Yuanchao said.
China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
The comments come ahead of interest rate decisions from the Federal Reserve and the Bank of Japan next week. While the Fed is unexpected to lift short-term rates, speculation has increased in recent weeks that the BOJ could ease some of its monetary policies.
Gold is viewed as a safe-haven asset for investors in periods of severe economic instability.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.35% to an intraday high of 99.54. The dollar remains near a 12-month higher from December, when the index eclipsed 100.00.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for March delivery fell 0.034 or 0.24% to 14.060 an ounce.
Copper for March delivery gained 0.006 or 0.30% to 2.002 a pound.
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