Gold retreats from 6-year high on profit-taking

Gold prices on the Asian market hit a six-year high on Friday, before falling on the European market with marked correction and profit taking, as the yellow metal is about to make its second consecutive weekly gain based on prospects for US interest rate cuts.

As of 08:55 GMT, gold prices fell by 0.5% to trade at $1,440.05 per ounce from the opening level of $1,447.08 and recorded the highest at $1,452.89 (the highest since May 2013) and the lowest at $1,436.54.

Yesterday, gold prices rose by 1.4%, the second daily gain in a row, supported by the decline of US dollar against a basket of currencies, in addition to the accelerated demand on the metal as the best alternative investment.

The dollar index rose around 0.3% on Friday, about to make its first gain in three days, as it retreated from a two-week low of 96.67 points recorded earlier in the day, reflecting the recovery of the dollar again against a basket of major and minor currencies.

The dollar fell broadly after New York Federal Reserve Chairman John Williams called on Thursday for precautionary measures to avoid having to deal with very low inflation and interest rates.

A representative of the Reserve Bank in New York later said that Williams' comments are academic and not related to US monetary policy guidance.

Following Williams' comments, prospects for the Federal Reserve's interest rates cut by 50 basis points jumped to 70 percent and fell again to about 40 percent after the representative of the bank clarified.

Over the course of the week, gold prices so far rose 1.8%, about to make their second weekly gain in a row, based on the current strong prospects for the Federal Reserve to cut interest rates by 25 basis points this month, and after the demand accelerated on the metal as the best alternative investment .

Gold holdings at the SPDR Gold Trust (the world's largest gold-backed index) rose yesterday by 11.44 metric tons, the second daily increase in a row, and the largest daily increase since June 21, bringing the total to 814.62 metric tons, which is the highest level since the first of February.