SINGAPORE, Oct 16 (Reuters) - Gold hovered below a
3-1/2-month high on Friday after strong U.S. inflation data
supported the dollar, but the metal was set to post its biggest
weekly jump in four weeks on bets the Federal Reserve will not
hike interest rates this year.
FUNDAMENTALS
* Spot gold XAU= was steady at $1,181.80 an ounce by 0040
GMT. It had hit a 3-1/2-month high of $1,190.63 in the previous
session, but ended the day lower.
* The metal snapped a four-day rally on Thursday after data
showed a surprise 0.2-percent rise in the September U.S. core
consumer price index, boosting the year-on-year gain to 1.9
percent and pushing it closer to the Fed's 2-percent goal.
* The data provided some relief to the dollar, which has
been battered by a run of poor U.S. indicators, helping it move
away from seven-week lows hit earlier in the week. USD/
* But gold was on track for a 2-percent weekly jump as
markets believe recent weak U.S. data in the backdrop of
sluggish data out of China would prompt the Fed to stand pat on
rates until next year.
* Gold benefits from low interest rates that cut the
opportunity cost of holding non-yielding assets.
* Many Fed watchers are exasperated by the mixed messages
from the U.S. central bank in recent weeks. Fed Chair Janet
Yellen and other officials have said they expect a rate hike
will be needed by the end of this year, but two Fed governors
this week urged caution.
* Fed policymakers are not as divided as it may appear and
are generally operating under the same framework for determining
when to raise interest rates, one Fed official said on Thursday,
while another said the differences of opinion reflect the
countervailing economic data. urn:newsml:reuters.com:*:nL1N12F2TS
* Investor sentiment towards bullion has improved. Holdings
in SPDR Gold Trust GLD , the world's largest gold-backed
exchange-traded fund, rose 0.73 percent to 700 tonnes on
Thursday, their highest since mid-July. GOL/ETF
* Among other precious metals, silver XAG= was headed for
a third straight weekly gain, while platinum XPT= was eyeing
its second weekly jump. Palladium XPD= , however, snapped a
five-week winning streak, and was headed for a 1-percent drop.
MARKET NEWS
* Asian shares got a bright start on Friday, catching some
of Wall Street's shine after upbeat U.S. price and jobless
claims data calmed some recent concerns about the strength of
the U.S. economy. MKTS/GLOB
DATA AHEAD (GMT)
0900 Euro zone Eurostat trade Aug
0900 Euro zone Inflation final Sep
1315 U.S. Industrial output Sep
1400 U.S. JOLTS job openings Aug
1400 U.S. Univ of Michigan sentiment index Oct
PRICES AT 0040 GMT
Metal Last Change Pct chg
Spot gold 1181.8 -0.9 -0.08
Spot silver 16.09 0.01 0.06
Spot platinum 1002.49 -0.51 -0.05
Spot palladium 700.75 -0.75 -0.11
Comex gold 1181.9 -5.6 -0.47
Comex silver 16.12 -0.044 -0.27
COMEX gold and silver contracts show the
most active months