Gold gained on Friday as the dollar dropped from its highs, but it was still headed for a weekly loss as traders turned their attention away from the Federal Reserve’s widely anticipated pause this month to persistently strong U.S. statistics.
By 03:45 GMT, spot gold was up 0.3% to $1,924.98 per ounce, but it was still expected to drop 0.7% on a weekly basis. Futures for U.S. gold increased 0.3% to $1,949.00.
“Market players are searching for other asset types that can offer them bigger yields. That currently seems to be the value of the dollar, according to Brian Lan of Singapore-based trader GoldSilver Central.
A flood of robust U.S. economic data that have also called into doubt the Fed’s rate-hike cycle helped the dollar slip 0.2% on the day but was headed for its best weekly gain run in nine years.
Data released this week revealed that the U.S. services sector expanded in August, and that unemployment claims unexpectedly declined this week to their lowest level since February, signalling that the labour market is still tight.
According to the CME FedWatch tool, markets predicted that the Fed would hold interest rates steady during its meeting on 19–20 September, but they also placed a 41% wager on one additional rate hike before 2024.
Higher interest rates make non-interest-bearing gold less appealing by boosting returns on safe-haven Treasury bonds, which are expected to see their first weekly increase in three weeks.
While maintaining that more work needed to be done to control inflation, three Fed officials who spoke on Thursday suggested that the Fed could forego a rate hike in September.
Platinum increased by 0.2% to $905.34 while silver increased by 0.6% to $23.08 per ounce. They were both expected to have their worst weeks since June 23, though.
To $1,218.77, palladium increased by 0.6%.