Gold heads for weekly loss as investors unwind inflation-fuelled rally
- Spot gold was down 0.5% at $4,326.75 per ounce
Gold prices slipped Friday, heading for a weekly loss, as investors took profits after mild US inflation data reduced Federal Reserve rate hike expectations, previously boosting bullion.
- Impact of US inflation data on gold prices.
- Reduced Federal Reserve rate hike expectations.
- Outlook for gold and other precious metals.
Gold prices slipped on Friday and were headed for a weekly loss as investors locked in profits after mild US inflation data propelled bullion to its highest level in more than two months and weakened the case for a near-term Federal Reserve rate hike.
Spot gold was down 0.5% at $4,326.75 per ounce, as of 0336 GMT.
While US gold futures for December delivery slid nearly 1% to $4,382.50.
Bullion climbed to its highest point since June 5 on Thursday, before settling 1.3% lower and setting it on track for a weekly loss.
“There is some episodic and more speculative capital that’s maybe taking a bit of profit in gold, because there’s not a near-term catalyst quite so potent immediately in front of us,” said Ilya Spivak, head of global macro at finance content network Tastylive.
“Gold may be setting up, with some choppy trading along the way, for a meaningful rally now.
And if we can take out $4,400, I don’t think $5,000 by year end is any kind of a sketch.“
The non-yielding metal got a boost after an unexpected drop in US July nonfarm payrolls last week, followed by softer inflation data this week, sharply reducing expectations of a rate hike next month.
US producer prices were unchanged in July, following a revised 0.1% drop in June, while US consumer prices barely increased last month as the cost of gasoline declined for a second consecutive month.
Traders are now pricing only a 35% chance of a rate hike in September, down from about 55% last week, according to the CME FedWatch Tool.
Lower interest rates make gold more attractive relative to yield-bearing assets.
On the geopolitical front, Washington on Thursday threatened to maintain a naval blockade of Iran indefinitely, ratcheting up economic pressure on Tehran as ceasefire talks have floundered.
In other metals, spot silver slipped 0.4% to $64.17 per ounce.
Platinum slipped 0.3% to $1,711.84, while palladium was steady at $1,306.98, both touching their lowest levels since August 4 earlier in the session.
Both metals were headed for a weekly drop.
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