Gold gains on dollar weakens, US rate cut hopes dim

Gold prices were set for a weekly gain on Friday, buoyed by a softer dollar as US Federal Reserve officials bruised hopes of early interest rate cuts this year and safe-haven demand amid Middle East tensions.

Spot gold was up 0.6% to $2,036.39 per ounce as of 11:35 ET (1635 GMT), and was on track for a 1.1% weekly rise.

US gold futures were 0.6% higher at $2,043.4 per ounce.

The dollar index was heading for its first weekly dip in almost two months and US Treasury yields was also down for the week, making greenback-priced bullion less expensive to overseas buyers. [USD/]

"Gold is up primarily on the fact that the US dollar is a little weaker," said Bob Haberkorn, senior market strategist at RJO Futures.

"It's a delicate walk right now in the precious metals market, but there is a lot of safe haven buying despite the rates being as high as they are."

Fed Governor Christopher Waller said on Thursday that he was in "no rush" to cut rates, firming investor bets against US interest rate cuts before June.

Most policymakers at the Fed's last meeting were concerned about the risks of cutting interest rates too soon, minutes showed.

Recent data showing higher-than-expected US consumer and producer prices also dashed speculation about an early interest rate cut, further weighing on bullion.

Lower interest rates boost the appeal of holding non-yielding bullion.

"More hawkish comments from Fed officials overnight have been a modest drag for the yellow metal," said UBS analyst Giovanni Staunovo.

Meanwhile, a surge of interest in bitcoin exchange-traded funds (ETFs) is prompting investors to swap out holdings in gold-backed ETFs.

Spot platinum gained 0.1% to $902.50, palladium rose 2% to $986.89. Silver was up 0.7% to $22.91, and was down 2.1% so far in the week.