Gold edges higher but on track for weekly loss

Bengaluru — Gold was marginally up on Friday, as the dollar clung to its 20-year peak, setting prices on course for their biggest weekly drop in eight by driving down demand for bullion.

Spot gold inched up 0.1% at $1,744.07/oz by 3.23am GMT. US gold futures were flat at $1,739.70. The dollar steadied near its highest since 2002, keeping greenback-priced gold near nine-month lows hit on Wednesday. Two of the Federal Reserve’s most vocal hawks on Thursday said they would support another 75 basis point interest rate increase later this month but a downshift to a slower pace afterward, even as both downplayed the risk of higher borrowing costs pushing the US into recession.

“Gold bulls were hoping for some reprieve from known Fed hawks [Christopher] Waller and [James] Bullard, given the market narrative has pivoted form inflation fears to growth concerns. But nary a dove was in sight,” said Stephen Innes, managing partner at SPI Asset Management.

Rising short-term US interest rates increase the opportunity cost of holding non-yielding gold. Gold prices have lost about 3.8% this week. It is likely to be their fourth straight weekly fall, and worst since mid-May.

“We should expect US yields to remain firm into next week’s heavy US data docket, with CPI [consumer price index] the headliner, hence gold could have trouble lifting above $1,750-$1760,” Innes said.

Benchmark US 10-year Treasury yields steadied on Friday after gains in the previous two sessions. Asian shares tracked overnight Wall Street gains as fears of an economic slowdown cooled and sterling began to claw back recent losses after British Prime Minister Boris Johnson’s decision to resign.

Spot silver dipped 0.3% to $19.28/oz, and platinum firmed 0.1% to $874.50, but both were set for weekly losses. Palladium climbed 0.6% to $2,002.50, and has gained about 2% for the week.

Reuters