Weak dollar strengthens gold, currency fails with oil as Opec production surges

Gold rallied on Friday helped by a weak US dollar following dovish data and comments overnight while increasing supplies from the Organization of the Petroleum Exporting Countries (Opec) pushed crude prices off multi-month highs.

The yellow metal rose to $1205.69 from Thursday's close of $1198.24, moving further off the two-week low of $1183 touched on 14 April. Gold now aims $1,224.23, the April high, though $1210 may resist slightly ahead of that.

Meanwhile, Brent crude for spot delivery dropped to $62.91/bbl from $63.82, distancing further off the four-month high of $64.83 touched earlier on Thursday.

Charts show that $61.97 is the nearest support for the commodity ahead of the more stable $60.29-60.0 region.

Opec said on Friday that its March production jumped 810,000 barrels per day to 30.79 million bpd, which is equivalent to a third of global supply, Reuters reported.

The Energy Information Administration said on Thursday that US natural gas stocks increased by 63 billion cubic feet in the week to 10 April, much higher than the previous week's increase of 15 bcc and far exceeding market expectations of an increase of 53 bcf.

Opec said lower output from the US and other rival producers and plunging oil prices since June last year increased demand for Opec's supplies.

Dollar

The USD index dropped to 97.28 on Thursday, its lowest since 8 April, before ending down 0.67% on the day at 97.67. The gauge has declined from the previous close on Friday in Asia to 97.51. So far this week, the index is down 1.8%.

In the US, initial jobless claims for the week to 10 April rose to 294,000 from previous week's 282,000 against the consensus of a drop to 280,000. Housing starts fell to 926,000 in March from 908,000 in February while the consensus was for a rise to 1.04 million.

Fed vice chairman Stanley Fisher said the determining role of data on the exact timing of a rate hike at some point later this year. But he gave no sense of when he thought that would be.

Boston Fed president Eric Rosengren said the US economy is not yet ready for higher short-term rates as it has not met the current inflation and job market performance goals.