Gold retreats but poised to end best month since February

Gold slid 2% on Friday as the U.S. dollar rebounded from a more than one-month low hit in the previous session, though the metal was still on track for its first monthly gain in five as weaker inflation data reduced expectations of further U.S. rate hikes.

Spot gold was down 1.8% at $4,027.75 per ounce at 09:59 a.m. EDT (1359 GMT), after falling 2% earlier in the session. U.S. gold futures for August delivery dropped 1.9% to $4,025.10.

Gold has gained 0.5% so far this month, its biggest monthly increase since February.

The gains have been primarily driven by softer inflation data, which led traders to scale back expectations for Federal Reserve interest rate hikes for the year and as oil prices retreated to pre-Iran war levels earlier this month.

“Although gold is on the cusp of ending a 4-month losing streak, the precious metal has struggled to carve a bigger gap above the psychological $4,000 level,” said Han Tan, chief market analyst at Bybit.

The metal remains supported above $4,000 by expectations that Fed Chair Kevin Warsh may broaden the central bank’s focus beyond its preferred inflation measures and rate increases, Tan added.

Data on Thursday showed U.S. inflation slowed in June, but the easing was likely temporary as renewed hostilities in the Middle East lifted oil prices.

Gold on track to end four-month slump as investors weigh Fed signals

Warsh this week pledged an unwavering commitment to bring inflation down without signaling a readiness to raise interest rates.

The dollar gained 0.5% after dropping about 2.4% on Thursday, in its biggest one-day drop since January 2023. A stronger dollar makes bullion more expensive for holders of other currencies.

Traders see a 65% chance of a rate hike in September, versus a more than 80% chance a week before, according to the CME FedWatch Tool.

Elsewhere, China’s market regulator urged solar companies to resist “vicious” price competition in a price compliance guidance meeting on Friday, a statement showed. Silver is a key industrial metal used in solar photovoltaic panels.

Spot silver fell 2.9% to $57.29 per ounce. Platinum slid 2.5% to $1,618.97, and palladium dropped 3.4% to $1,260, although both metals were headed for a monthly gain.