Investing.com - Gold prices were hovering at three-and-a-half week highs on Friday, as concerns over the U.S. deficit took over market sentiment and sent the greenback broadly lower.
Comex gold futures were up 0.44% at $1,361.1 a troy ounce by 03:00 a.m. ET (07:00 GMT), the highest since January 25.
The greenback turned broadly lower due to fresh concerns over the deficit in the U.S., which is projected to climb near $1 trillion in 2019 following the recent announcement of infrastructure spending and large corporate tax cuts.
The dollar had initially strengthened after the U.S. Commerce Department reported on Wednesday that consumer prices rose more than expected in January by 0.5%, sending U.S. bond yield higher.
Data on Thursday showed that the U.S. producer price index rose in line with expectations by 0.4% last month.
Rising inflation would be a catalyst to push the Federal Reserve toward raising interest rates at a faster pace than currently expected.
Gold is sensitive to moves in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.17% at 88.32, the lowest since December 2014.
Elsewhere on the Comex, silver futures were up 0.50% at $16.88 a troy ounce.