Gold faces first weekly loss in four as rate cut bets dwindle

GOLD PRICES held steady on Friday as they looked set to log their first weekly drop in four as investors lowered expectations of a US interest rate cut after data over the week showed bubbling price pressures.

Spot gold was little changed at $2,159.99 per ounce, as of 2:42 p.m. EDT (1842 GMT). Bullion lost 0.8% for the week, in its first weekly decline since mid-February after hitting a record high of $2,194.99 last week.

US gold futures settled 0.3% lower at $2,161.50.

Data this week showed US consumer prices increased above expectations in February and producer prices also showed some stickiness in inflation.

“Gold has already priced in whatever positive boost it would get from expectations that interest rates are going down... if inflation starts to kick higher again, it means that policy makers are going to have to keep monetary policy more restrictive for longer,” said Everett Millman, chief market analyst at Gainesville Coins.

Higher-than-expected inflation maintains pressure on the Fed to keep interest rates elevated, weighing on gold. The non-yieldbearing precious metal is also used as a hedge against inflation.

Traders continue to bet on interest rate cuts in June, although the chances of rates easing in June are seen at 59%, compared with 72% before the CPI data, the CME FedWatch Tool showed.

The US dollar index headed for its largest weekly gain since mid-January, making gold more expensive for overseas buyers.

Spot platinum rose 1.5% to $940.95 per ounce; palladium gained 1.2% to $1,082.61; while silver was up 1.7% at $25.25. —