Gold heads for weekly loss as US inflation concerns sap demand

Shafaq News/ Gold was on track for a weekly loss as persistent inflationary forces looked increasingly likely to push back the timing for US rate cuts.

The precious metal dipped on Friday and was down 2.7% for the week, after a closely watched measure of underlying US inflation advanced at a faster-than-expected clip. The data cast doubt on the Federal Reserve’s ability to soon start lowering borrowing costs, sending Treasury yields higher. Higher rates and yields are typically negative for gold, as it doesn’t pay interest.

Fed Bank of Chicago President Austan Goolsbee said in an interview last week that was published by the Wall Street Journal on Thursday that the US central bank had to “recalibrate” after a string of higher-than-hoped inflation data.

Still, Thursday’s inflation print combined with a US gross domestic product report that trailed all forecasts, rekindling the prospect of stagflation, which could add more support to gold. Bullion is among assets that benefit from haven flows.

Traders are now awaiting Friday’s release of the personal consumption expenditures index — the Fed’s preferred measure of inflation. The reading is expected to show that price pressures remained elevated in March.

Spot gold, which hit a record high two weeks ago, was down 0.2% at $2,328.08 an ounce at 9:12 a.m. in Singapore, after closing up 0.7% on Thursday. The Bloomberg Dollar Spot Index was flat. Silver slipped, while palladium and platinum edged higher.

(Bloomberg)