As traders considered recent U.S. economic statistics and hawkish indications from the Federal Reserve on additional monetary tightening, gold prices dropped on Friday and were poised for a modest weekly decline.
By 0450 GMT, spot gold was down 0.2% to $1,954.83 per ounce. American gold futures decreased by 0.2% to $1,967.30.
On Thursday, gold fell to a three-month low before turning around to end the day higher as U.S. economic data provided some relief from the Fed’s “hawkish pause” on rate hikes.
Due to the Fed’s continued hawkish stance on inflation and interest rates, gold is finding it difficult to rise. Thus, there is less of a reason to buy gold now that more interest rate increases are anticipated, according to Edward Meir, a metals analyst at Marex.
While increased interest rates lessen the appeal of zero-yield bullion, gold is nevertheless seen as a safe haven during economic uncertainty.
After the Fed indicated in updated predictions that borrowing costs could still need to increase by as much as half a percentage point by year’s end, traders are now factoring in a 72% chance of a 25-basis point rate hike in July.
Gold losses were curbed by the dollar index, which kept close to a one-month low.
According to Meir, gold may trade in the $1,931–$2,000 range over the course of the next two weeks, with strong resistance at the upper end.
In contrast, the Bank of Japan kept its ultra-loose monetary policy in place despite higher-than-expected inflation as it focused on bolstering a shaky economic recovery in the face of a significant downturn in global growth.
Platinum was barely changed at $985.55 per ounce and spot silver was unchanged at $23.8451 per ounce. But a weekly loss seemed imminent for both metals.
The palladium price held steady at $1,397.90 and was expected to have its best week since April.