Gold edges off four-week low ahead of Janet Yellen's speech

Gold edged higher on Friday as markets braced for a speech by Federal Reserve chair Janet Yellen later in the session, which is being closely watched for clues on the direction of US interest rates.

Yellen is scheduled to address a meeting of central bankers in Jackson Hole, Wyoming, at 1400 GMT. Top Fed officials have pushed the case for a rate hike in the past week, citing improvement in US data.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Spot gold was up 0.3 per cent at $1,325.45 an ounce at 0930 GMT, while US gold futures for December delivery were up $3.80 an ounce at $1,328.40. The spot prices hit a four-week low on Thursday of $1,317.46 an ounce.

The metal has slid for five straight days, falling on Thursday after US jobless and durable goods data beat forecasts, and Kansas City Fed President Esther George said it was time for the Fed to raise US rates gradually.

If Yellen chooses to retain a neutral tone, gold could remain caught in its recent range between $1,310 and $1,375.

"We'll have to see whether Yellen deviates from the consensus view, which is that she'll say nothing, really, to alter the status quo," Societe Generale analyst Robin Bhar said. "Gold is treading water right now and is unlikely to see too much action."

"(We would need) volatility in the currency markets or the rate markets to provide some trading incentives for gold."

The dollar held steady against the euro on Friday, leaving it little changed on the week, as investors focused on Yellen's speech. It could rise sharply, weighing on gold, if Yellen indicates rates will rise sooner rather than later. [FRX/]

"There is a chance that Yellen could decide that a stronger signal about near-term policy would now be appropriate in light of diminished risks globally and an improved US labour market," HSBC said in a note.

Gold discounts in India hit near three-month lows this week while buying gathered steam elsewhere in Asia as lower prices and festive buying lifted demand for the metal. [GOL/AS]

Silver was up 1 per cent at $18.67 an ounce after hitting an eight-week low of $18.46 on Thursday.

Platinum was 1 per cent higher at $1,079 after falling to a one-month low of $1,067.25 in the previous session. Palladium was 1.4 per cent higher at $693.50.