NEW YORK: Gold prices edged higher on Friday, buoyed by a weaker dollar, but were poised for a weekly decline after hotter-than-expected US producer price data dampened prospects for a super-sized September rate cut by the Federal Reserve.
Spot gold rose 0.2% to $3,340.59 per ounce as of 0941 GMT. Bullion has lost 1.7% for the week. US gold futures for December delivery edged up 0.1% to $3,387.50.
The US dollar index fell 0.4%, making gold less expensive for other currency holders. “In the short term, gold has a heightened inverse relationship to moves in the US dollar, which in turn is being whipsawed by economic data and fast news on both tariffs and Ukraine,” independent analyst Ross Norman said.
US producer prices increased by the most in three years in July amid a surge in the costs of goods and services, data showed on Thursday, signalling inflation pressures in the pipeline. Weekly jobless claims also came in lower than expected, at 224,000 compared to forecasts of 228,000.
The data dampened bets, fanned by benign consumer price data and comments from US Treasury Secretary Bessent earlier this week, that the Fed’s next cut might be more than a quarter-point.
Non-yielding gold typically performs well in low-interest-rate environments. US consumer price data showed only a marginal increase in July, briefly boosting hopes for large-size rate cut by the Fed. “We have seen in the past that gold price corrections get smaller and smaller, suggesting that some buyers, who missed out in the past, use these price setbacks as a way to gain exposure to the yellow metal,” said UBS commodity analyst Giovanni Staunovo.
On the geopolitical front, investors are awaiting the outcome of US President Donald Trump and Russian President Vladimir Putin’s meeting in Alaska later in the day. Elsewhere, spot silver fell 0.5% to $37.79 per ounce, platinum lost 0.9% to $1,345.02, and palladium was down 1.2% to $1,131.56.
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