Gold prices were set for their second straight weekly drop on Friday after surprisingly hot US consumer prices led traders to reassess their rate-cut hopes, although bullion recouped some of the losses following a slump in consumer spending.
Fundamentals
Spot gold was flat at $2,003.95 per ounce, as of 0222 GMT, but has lost nearly 1% for the week so far.
US gold futures edged 0.1% higher to $2,016.00 per ounce.
Bullion rose about 0.6% on Thursday after data from the US Commerce Department showed retail sales dropped 0.8% last month on its biggest fall since February 2023. Economists polled by Reuters had forecast retail sales to dip 0.1%.
Other data showed initial jobless claims fell by 8,000 to a seasonally adjusted 212,000 for the week ended Feb. 10, slightly below the 220,000 estimate. US import prices increased by the most in nearly two years in January amid rising costs for petroleum and other goods.
Federal Reserve Bank of Atlanta President Raphael Bostic said on Thursday that while the US central bank had made a lot of progress lowering inflation pressures, ongoing risks mean that he was not yet ready to call for interest rate cuts.
Bostic said he had pencilled in two cuts for 2024, lower than the Fed’s collective “dot plot” projection of three cuts released in December. The US Fed will update those forecasts at its policy meeting next month.
Chicago Fed President Austan Goolsbee cautioned against delaying rate cuts for too long even after data showed consumer prices rose more than expected in January.
Traders see the first cut likely arriving in June.
Focus now shifts to US producer price index numbers due at 1330 GMT.
Spot platinum fell 0.5% to $893.51/Oz, palladium was steady at $953.68, while silver rose 0.2% to $22.94.