NEW YORK: Gold dropped more than 1percent on Friday as the US dollar regained footing, but was still on track to post its first monthly rise since February as investors pared back rate hike bets after the Federal Reserve meeting this week.
Spot gold slipped 1.1percent to USD4,055.41 per ounce by 1050 GMT but was headed for a weekly rise of 0.5percent. Prices were also up about 1.7percent so far this month.
US gold futures for August delivery dropped 1.2percent to USD4,053.60. “Gold struggles to regain meaningful momentum and remains in the corrective phase of a broader structural bull market,” independent analyst Ross Norman said.
“The dollar index has staged a modest recovery back above the key 100 level following its sharp post-FOMC sell-off, taking some of the shine off gold today.”
The dollar gained 0.3percent after dropping about 2.4percent on Thursday, in its biggest one-day drop since January 2023. A stronger dollar makes bullion more expensive for holders of other currencies. On Wednesday, the Fed left interest rates unchanged at its policy meeting, while US central bank chief Kevin Warsh vowed to bring inflation down, leaving markets confused.
Traders are now pricing in a 67percent chance of a rate hike in September, versus an over 80percent chance a week before, according to the CME FedWatch Tool.
Data on Thursday showed US inflation slowed in June, but the easing was likely temporary as renewed hostilities in the Middle East lifted oil prices. Surging energy costs have heightened inflation concerns and reinforced expectations of elevated US interest rates, undermining the appeal of the non-yielding bullion.
Meanwhile, gold demand in India remained muted this week as buyers waited for clearer price direction, while a stronger yuan lifted purchases in top consumer China.
Among other metals, spot silver fell 1.7percent to USD58.00 per ounce. Platinum slid 1.3percent to USD1,638.77, and palladium dropped 1.1percent to USD1,289.77, although both metals were headed for a monthly gain.
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