Gold prices gained on Friday, thanks to a softer dollar, but non-yielding bullion was headed for its biggest quarterly decline since March last year on an ongoing aggressive monetary policy stance by central banks worldwide.
Spot gold rose 0.7% to $1,671.68 per ounce by 0823 GMT. Prices are set for their best weekly gain since end-July, up 1.7% so far. For the quarter, however, it is down 7.4% — its worst since the first quarter of 2021.
U.S. gold futures added 0.7% to $1,681.00.
The dollar index touched a one-week low, making gold less expensive for buyers holding other currencies.
"The slowdown of the U.S. dollar is supporting gold," said Carlo Alberto De Casa, external analyst for Kinesis Money, adding short term outlook for gold, however, still remains weak.
The trend of gold is mostly related to interest rates, and the aggressive shift in the monetary policy of the Federal Reserve and other central banks have been a bearish catalyst for bullion, De Casa added.
Fed policymakers have been resolute in raising interest rates despite a turmoil in global financial markets. Although gold is considered a safe bet in times of economic and political uncertainty, rate hikes tend to dull the appeal of bullion, which yields no interest.
Meanwhile, Britain's economy unexpectedly grew in the second quarter but was below its pre-pandemic peak, contrary to an earlier estimate that it had recovered.
"As we move towards let's say October, November, the physical demand from India, China is going to be supportive," said Ajay Kedia, director at Kedia Commodities in Mumbai.
"So, I'm not much bearish on gold, prices should get support near $1,600."
Spot silver rose 1.6% to $19.12 per ounce, while platinum jumped 1.1% to $874.26. Both metals were headed for their second straight quarterly decline.
Palladium climbed 1.2% to $2,226.52 and has gained about 15% so far in the quarter.
(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru; editing by Uttaresh.V)