Gold on track for weekly gains; Markets focus on prospects for US-Iran peace deal

Gold edged higher on Friday and headed for a weekly gain on easing inflation fears and fears of higher interest rates as investors remained optimistic about the US-Iran peace deal despite renewed fighting.

Fundamentals

* Spot gold was up 0.3% at $4,700.80 an ounce by 0059 GMT. Bullion is up 1.9% so far this week.

* US gold futures for June delivery were steady at $4,709.90.

* The United States and Iran exchanged fire on Thursday in the most serious test yet of their months-long ceasefire, but Iran said the situation had returned to normal while the US said it did not want to escalate.

* Renewed hostilities erupted as Washington awaited Iran’s response to a U.S. proposal that would halt fighting.

* Federal Reserve Bank of Cleveland President Beth Hammock said in a radio interview Thursday that she expects the central bank to keep interest rates well into the future as it navigates an environment of considerable uncertainty.

* Meanwhile, China’s central bank weighed on gold for the 18th straight month in April, data from the People’s Bank of China showed on Thursday.

* Hong Kong Exchanges and Clearing (HKEX) is considering relaunching gold futures, as the city pushes to become a center for international gold trading and storage amid volatile bullion prices driven by geopolitical tensions.

* Markets now await the monthly US employment report later in the day to gauge how the Fed will proceed with monetary policy this year.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1% to 941.72 metric tons on Wednesday. (GOL/ETF)

* Spot silver was up 0.8% at $79.10 an ounce, platinum was up 0.5% at $2,032.70 and palladium was up 0.1% at $1,482.50.

Data/Events (GMT)

0600 UK Halifax House Prices MM, YY April

1230 US Non-Farm Payrolls Apr

1230 US Unemployment Rate April

1230 US Average Earnings YY Apr

1400 US U Mich Sentiment Prelim May