By Sethuraman N R
(Reuters) - Gold prices rose for a third session on Friday to hit their highest since September, with a slump in the U. S. dollar helping drive bullion towards its fifth-straight weekly gain.
Spot gold had edged up 0.5 percent to $1,328.84 an ounce by 0703 GMT, after earlier touching its highest since Sept. 15 at $1,330.34.
The metal is up 0.7 percent so far this week and is set for its longest run of weekly gains since a streak that finished in the week ending April 14.
U. S. gold futures were up 0.5 percent at $1,329 an ounce.
The dollar index, which measures the greenback against six major currencies, fell to its lowest since Sept. 20 at 91.689.
The euro jumped against the dollar as the European Central Bank signalled it could begin to wind down its 2.5 trillion euro ($3.01 trillion) stimulus programme this year.
A stronger euro potentially boosts demand for gold by making dollar-priced bullion cheaper for European investors.
"There is a lot of doubt on how long prices have to run from here ... Prices have risen despite the Fed raising interest rates and the main driver has been the U. S. dollar, which we continue to see help gold run higher in the first quarter," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Weak inflation at the producer level could add to concerns that the factors restraining inflation could become more persistent and result in the U.
S. Federal Reserve being more cautious about raising interest rates this year.
Higher rates could dent demand for non-interest-paying gold.
Investors will be watching the U. S. Consumer Price Index (CPI) data due later on Friday.
Among other precious metals, spot silver rose 0.8 percent to $17.11 an ounce. Silver is on track for its first weekly loss in five weeks, down 0.6 percent so far this week.
Palladium was up 0.5 percent at $1,088.50 an ounce, after dropping to a more than one-week low at $1,075.50 on Thursday.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)