BENGALURU: Gold eased on Friday and was on course for a second straight weekly fall as the US dollar and Treasury yields firmed after hot inflation data cooled prospects of early rate cuts by the Federal Reserve. Spot gold was down 0.3% to $1,997.87 per ounce at 9:26 a.m. ET (1426 GMT), and has lost 1.3% for the week so far.
US gold futures were down 0.3% to $2,009.60 per ounce. The dollar index rose 0.3% 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 also rose more than expected last month.
The Fed is not likely to cut interest rates in March, thus 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. Even though gold is considered an inflation hedge, higher interest rates dim non-yielding bullion’s appeal.
Traders have pushed back their expectations of a US interest rate cut from March to June. Currently, markets are pricing a 69% chance of a cut in June, according 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 fell 0.6% to $892.19 per ounce, palladium was down 0.6% to $947.58 but up 10.4% for the week, while silver was 0.7% higher at $23.05.
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