Gold prices steadied on Friday, heading for their fourth consecutive weekly gain, as broader weakness in the dollar countered pressure from an uptick in Treasury yields and prospects of US interest rate hikes.
Spot gold held its ground at $1,790.23 per ounce, as of 0511 GMT, and has gained nearly 1% so far this week.
US gold futures edged 0.1% lower to $1,806.10.
“Fundamentally gold is facing conflicting factors here. On one hand, we have a weaker US dollar helping, but the other side of the equation is of course the rise in yields,” said Ilya Spivak, a currency strategist at DailyFX.
The dollar was set for its third weekly loss in four, making gold less expensive for other currency holders.
Data on Thursday showed US producer prices unexpectedly fell in July. It came a day after news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices.
Gold inches lower on rate hike expectations by Federal Reserve
“With US inflation data now behind us, it is almost like the calm after the storm and that has led to tight ranges for currencies and commodities after a spell of volatility a couple of days ago,” said Matt Simpson, a senior market analyst at City Index.
San Francisco Federal Reserve Bank President Mary Daly said that while a half-percentage-point interest rate hike in September “makes sense,” she is open to the possibility of a bigger hike to fight too-high inflation.
Fed funds futures traders are now pricing in a 61.5% chance of a 50-basis-point hike in September and a 38.5% chance of a 75-bp increase.
Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion.
Spot silver gained 0.2% to $20.34 per ounce, platinum fell 0.1% to $954.74, and palladium slipped 0.2% to $2,271.95.
Comments
Comments are closed.