 "Gold gains as dollar dip staves off some pressure from rate hike prospects")
By Brijesh Patel
(Reuters) - Gold rose on Friday as the dollar's retreat temporarily seemed to stave off some pressure on the precious metal from prospects of more interest rate hikes.
Spot gold rose 0.5% to $1,716.30 per ounce by 1:55 p.m. ET (1755 GMT), after rising to its highest since Aug. 30 earlier in the session. U.S. gold futures settled 0.5% higher at $1,728.6.
The yellow metal was on track to rise 0.3% for the week, its first weekly rise in four.
"The U.S. dollar index really dropped sharply overnight and that has supported the gold and silver markets. Also seeing some short-covering in the futures markets heading into the weekend," said Jim Wyckoff, senior analyst at Kitco Metals.
The dollar dropped to a more than one-week low against its rivals, making greenback-priced bullion cheaper for overseas buyers.
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However, the gold market continues to see a slow and steady reduction of exchange-traded funds (ETFs), and trading volumes on U.S. futures markets continue to weaken, suggesting that the move higher is unlikely to be sustained, said independent analyst Ross Norman. [GOL/ETF]
Investors now await U.S. inflation data for August due early next week after recent hawkish comments from Fed Chair Jerome Powell cemented bets of a large rate hike.
"If consumer prices come in hotter than expected, gold might see selling pressure target the $1,680 region" and a sharp deceleration with pricing pressures might only provide a modest boost for gold, Edward Moya, senior analyst with OANDA, said in a note.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
In the physical gold market, demand in some Asian hubs remained firm this week amid lower prices. [GOL/AS]
Silver rose 1.2% to $18.79 per ounce and was set for a weekly gain.
Palladium gained 2% to $2,182.18 per ounce and was headed for its best week since July.
Platinum inched up 0.1% to $879.83 per ounce and was on track for its biggest weekly gain since early June.
(Reporting by Brijesh Patel, Arundhati Sarkar and Arpan Varghese in Bengaluru; Editing by Vinay Dwivedi and Shounak Dasgupta)
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