Gold drifts from near-record high, but eyes weekly gain

Gold prices drifted lower from near-record highs on Friday as investors waited for more economic cues, but banking woes and hopes for a pause in US rate hikes kept safe-haven bullion on course for its best week in nearly two months.

Spot gold was down 0.6% at $2,038.38 per ounce by 1029 GMT, which some analysts termed a “consolidation”, but was up 2.4% for the week. US gold futures shed 0.5% to $2,045.10.

Gold hit $2,072.19 on Thursday, just shy of a record high of $2,072.49, after the Federal Reserve hinted that its marathon hiking cycle may be ending.

Investors now await data including US nonfarm payrolls figures at 1230 GMT, that could build the case for a rate cut, after Fed chair Jerome Powell pushed back on such expectations.

After a strong performance, gold’s in a bit of a wait-and-see mode ahead of US payrolls and will be sensitive to “short-term reversals in interest rate expectations, wider reaching deposit guarantees, and US dollar strength” in the short term, said UBS analyst Giovanni Staunovo.

“But gold should remain a hedge within a portfolio context.”

Global stocks eked out small gains as investors focused on bets of central banks pausing rate increases in light of another rout in shares of US regional lenders.

Economic uncertainty and lower rates boost demand for zero-yielding gold.

“But if we see further panic around the debt ceiling or US banks, hold onto your hats as I fear price action could get nasty around these highs and punish bulls and bears,” said Matt Simpson, senior market analyst at City Index, warning that in “times of severe stress all markets, including gold, can fall.”

Meanwhile, global gold demand fell in the first three months of 2023, the World Gold Council (WGC) said on Friday.

Spot silver fell 0.7% to $25.89 per ounce, platinum shed 0.2% to $1,037.71. Palladium rose 1% to $1,462.82.

Reuters