Gold prices dipped on Friday but were still on course for their greatest weekly gain since April as expectations for a pause in the Federal Reserve’s interest rate hikes after this month increased in response to signs of slowing U.S. inflation.
By 1:45 p.m. EDT (1745 GMT), spot gold was down 0.1% to $1,959.27 per ounce, but it had gained about 1.8% this week. U.S. gold futures ended the day at $1,964.40, slightly changed.
Early this week, following statistics revealed that U.S. consumer prices in June had their smallest annual gain in more than two years, speculation that the Federal Reserve could soon stop raising interest rates led to gold reaching its highest level since June 16.
“With inflation slowing, there is less expectation of future rate increases, which has helped gold this week. However, while yields are rising, prices are falling today, according to Daniel Pavilonis, senior market strategist at RJO Futures.
In the foreseeable future, prices will be range-bound. We may witness greater gains in gold if the Fed starts to claim that further rate increases are not necessary.
Standard U.S. yields increased little, decreasing the appeal of non-yielding bullion to investors.
The dollar, however, was on course for its worst weekly decrease since November, absorbing the decline in gold prices.
Fed Governor Christopher Waller stated on Thursday that he was not prepared to declare an end to inflation and that he preferred rate increases this year, a stance that was echoed in the FOMC minutes from June.
Holding gold with no returns has a higher opportunity cost as interest rates rise.
Physical gold sales were discounted for a third week in a row by Indian dealers due to low retail demand and high domestic prices. [GOL/AS]
According to the government website, the United Arab Emirates removed Emirates Gold off its “good delivery” list certification program.
The ounce of silver increased by 0.4% to $24.95 and is on pace for its highest week since mid-March.
Palladium fell 1.4% to $1,277.18 and platinum rose 0.1% to $974.03, but both metals were headed for a second straight weekly gain.