Gold on track for second weekly decline

Bengaluru — Gold was headed for a second consecutive weekly fall on Friday after an unexpected spike in US consumer prices made traders rethink their rate-cut expectations, though bullion recouped some of the losses after a drop in consumer spending.

Spot gold was flat at $2,003.40/oz, at 4.27am GMT, and has lost more than 1% for the week so far. US gold futures were also steady at $2,015.30/oz.

“There is no war premium, gold ETF holdings are withdrawing, Fed officials struck a hawkish tone, CPI [consumer price index] came on the higher side, and with dollar likely on a positive side — there is no particular reason for going long on gold,” Jigar Trivedi, a senior analyst at Reliance Securities.

Data this week showed inflationary pressures remained intact as US import prices increased by the most in nearly two years in January, while consumer prices rose more than expected in January. Markets now await another inflation report — the US producer price index (PPI) — due at 1.30pm GMT.

“No significant bounce-back in gold is expected and it’s possible that prices touch the $1970/oz-1960/oz level ... sentiment will be on the lower side only,” Trivedi said.

Recovering some losses for the week, bullion rose about 0.6% on Thursday after data showed the biggest month=on-month decline since February 2023.

Federal Reserve Bank of Atlanta president Raphael Bostic said on Thursday that he was not yet ready to call for interest rate cuts and had pencilled in two cuts for 2024, lower than the Fed’s collective “dot plot” projection of three cuts released in December.

The Fed will update those forecasts at its policy meeting in March, where it is expected to hold interest rates steady. Traders see the first cut likely arriving in June.

Spot platinum fell 0.7% to $892.04/oz, palladium dropped 1.5% to $938.55, while silver edged 0.1% higher to $22.93.

Reuters