Gold climbs back towards 17-month peak

BENGALURU, Jan 26 (Reuters): Gold rose on Friday, putting it on course for a near 2.0 per cent weekly gain and back towards the previous session's 17-month peak, as suggestions that senior US officials may support a weaker dollar knocked the currency lower.

The dollar slid half a per cent against the euro on Friday as comments in favour of a weaker U.S currency by Treasury Secretary Steven Mnuchin - though later somewhat contradicted by US President Donald Trump - led investors to suspect a protracted decline in the greenback may be likely.

Spot gold was 0.5 per cent higher at $1,354.35 an ounce at 1031 GMT, up 1.7 per cent so far this week. The metal hit its highest since August 2016 on Thursday at $1,366.07.

Dollar weakness tends to benefit assets priced in the US unit, which become more affordable for holders of other currencies, while ultra-low interest rates cut the opportunity cost of holding non-yielding bullion.