By Ira Iosebashvili

Gold prices rose Tuesday, as some investors bet that a strengthening U.S. economy will bring inflation in the new year.

Gold for February delivery closed up 0.5% at $1,138.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Prices for the metal marked their seventh straight week of losses Friday, pressured by a stronger dollar and expectations that the Federal Reserve will raise rates at a faster clip next year.

Some investors, however, believe gold will come back to life in the new year, amid signs that consumer prices are starting to rise. Home prices went up sharply in October, data showed Tuesday, the latest sign that the U.S. recoverycontinues apace.

"We still think you should not count out gold," said George Gero, managing director at RBC Capital Markets, in a note to clients. "Most of the dollar strength has been discounted, and inflation eventually may help gold become a factor in asset allocations again."

A rising dollar tends to weigh on gold, as the precious metal is priced in the U.S. currency and becomes more expensive to foreign buyers when the dollar appreciates. Gold also struggles to compete with yield-bearing assets when rates rise.

At the same time, some investors tend to buy gold on signs of quickening inflation, believing the metal will hold its value better than other assets when consumer prices rise.

March silver settled up 1.5% at $15.99 a troy ounce. April platinum was up 1.2% at $905.90 a troy ounce. Palladium was up 2.9% at $673.80 a troy ounce.

Write to Ira Iosebashvili at

(END) Dow Jones Newswires

December 27, 2016 15:06 ET (20:06 GMT)

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