Firmer dollar saps gold’s strength

Bengaluru — Gold prices slipped on Friday due to a stronger dollar, but were set for a fourth weekly rise in five as the US Federal Reserve retaining its interest rate cut projections for 2024 bolstered bullion's appeal.

Spot gold was down 0.4% at $2,172.72/oz by 3.19am GMT. Bullion has risen 0.8% so far this week.

US gold futures fell 0.5% to $2,174.30/oz.

The dollar advanced to a three-week high against its rivals and was on track for a second weekly rise, making gold more expensive for other currency holders.

“Impending rate cuts are generally supportive of gold prices and provide a floor for the yellow metal once the rate-cutting process comes into effect,” IG market strategist Yeap Jun Rong said.

“For now, it seems that gold is in extreme overbought conditions, which may call for some near-term cooling in its recent rally, with further downside to leave the $2,148 level on watch as immediate support to hold.”

On Thursday, gold prices rose to a record high after Fed policymakers indicated they still expected to reduce rates by three-quarters of a percentage point by the end of 2024 despite recent high inflation readings.

Fed chair Jerome Powell on Wednesday said recent high inflation readings had not changed the overall story of slowly easing US price pressures.

Gold, which pays no interest, tends to benefit when interest rates fall as this reduces the opportunity cost of holding bullion.

Fed funds futures traders are now pricing in a 74% probability that the Fed will begin cutting rates in June, according to the CME Group’s FedWatch Tool.

Spot silver dipped 0.9% to $24.53/oz, platinum fell 0.6% to $902.15 and palladium lost 2.2% to $988.67. All three were on track for a weekly fall.

Reuters