Gold rises as the dollar weakens, but the path of raising US interest rates caps the gains

Gold rose on Friday after the dollar hovered near a one-month low, but expectations of an increase in US interest rates this year limited gains.

And gold in spot transactions increased 0.3 percent to $ 1964.19 an ounce by 1030 GMT, on its way to rise 0.2 percent this week. US gold futures rose 0.3 percent to $1,976.70.

The dollar index rose, but settled near its lowest level in a month, making gold less expensive for holders of other currencies.

After the Federal Reserve indicated on Wednesday that interest rates may still need to rise by up to half a percentage point by the end of the year, traders expect a 25 basis point rate hike in July.

High interest rates weaken the demand for gold, which does not yield a return.

As for other precious metals, spot silver rose 0.6 percent to $24.01 an ounce, and platinum rose 0.1 percent to $986.59. But the two metals are heading for a weekly loss.

Palladium fell 0.5% to $1,393.40, and is set to record its best weekly performance since mid-April.