Gold prices set for second weekly loss

GOLD ticked up on Friday but was on course for a second straight weekly fall after hot inflation data cooled prospects of early rate cuts by the US Federal Reserve.

Spot gold was up 0.4% to $2,012.86 per ounce at 01:45 p.m. ET (1845 GMT), but has lost 0.6% for the week so far.

US gold futures settled 0.5% higher to $2024.10.

The dollar index was up for the week so far, and the benchmark 10-year Treasury yield extended gains, making gold less attractive.

Data showed that US producer prices increased more than expected in January. Another report on Tuesday showed that US consumer prices rose more than expected last month.

Even though gold is considered an inflation hedge, higher interest rates dim non-yielding bullion’s appeal.

As the Fed is not likely to cut interest rates in March, gold will probably struggle to gain much above the $2,000 level, said Everett Millman, chief market analyst at Gainesville Coins.

Economic growth in the US is fairly robust, indicating higher inflation, which is a headwind for gold and “I expect gold prices to further fall to $1,960s level,” he added.

Traders have pushed back their expectations of a US interest rate cut from March to June.

Markets are currently pricing a 73% chance of a cut in June, according to the CME Fed Watch tool.

Fed Atlanta President Raphael Bostic said on Thursday that more time was needed to weigh the prospect of a rate cut.

On the physical front, gold premiums in India rose to more than four-month highs this week as demand picked up, with jewellers stocking up for the wedding season.

Spot platinum rose 0.8% to $904.68 per ounce; palladium was down 0.5% to $948.11, but rose 10.4% for the week; and silver gained 2.4% to touch $23.46 per ounce. —