Gold poised for fourth weekly loss as hawkish Fed bets buoy dollar

NEW YORK: Gold was set for a fourth straight weekly fall on Friday, pressured by a stronger dollar driven by expectations of U.S. interest rate hikes, while investors also assessed the fragile U.S.-Iran peace agreement.

Spot gold slipped 0.1% to $4,022.95 per ounce by 0046 GMT and was on track for a weekly loss of 3.4%. U.S. gold futures for August delivery lost 0.2% to $4,038.10.

The U.N. International Maritime Organization paused its operation to escort ships through the Strait of Hormuz on Thursday after a vessel reported an attack, re-igniting fears over the preliminary U.S.-Iran deal.

The U.S. dollar index was headed for a second straight weekly gain, making gold more expensive for holders of other currencies.

Data on Thursday showed that U.S. inflation increased further in May, breaking above 4.0% for the first time in three years as the Middle East conflict boosted energy prices.

Chicago Federal Reserve President Austan Goolsbee said there was a “glimmer of hope” on services inflation in the latest inflation report, but underlying inflation pressures are still too high and trending the wrong way.

Federal Reserve Bank of New York President John Williams said that while inflation pressures are likely to moderate this year they remain too high, as he pushed back his expectation of getting inflation back to the Fed’s 2% target.

Traders expect three Fed rate hikes this year and are pricing in an about 63% chance of a September increase, according to the CME FedWatch Tool.

China’s net gold imports via Hong Kong fell about 38% month-on-month in May, with Hong Kong Census and Statistics Department data showing that they reached 53.674 metric tons, down from 86.715 tons in April.

Spot silver fell 0.2% to $57.77 per ounce, platinum was steady at $1,600.95, while palladium gained 0.4% at $1,188.97. All metals were headed for a weekly loss.