Gold prices eased on Friday, weighed down by a stronger dollar, but were on track for a fifth consecutive weekly gain as hopes of a slower pace of U.S. rate hikes boosted bullion’s appeal.
Spot gold fell 0.2% to US$1,927.38 per ounce, as of 0706 GMT, after scaling its highest level since April 2022 on Thursday. However, prices were bound for a 0.4% weekly gain.
U.S. gold futures rose 0.2% to US$1,928.20.
The dollar index gained 0.1%, making the greenback-priced gold more expensive for buyers holding other currencies.
A Reuters poll predicted the U.S. Federal Reserve will end its tightening cycle after a 25-basis-point hike at each of its next two policy meetings and then likely hold rates steady for at least the rest of the year.
“Gold is a touch softer but is still trading near recent highs. Fed policy calibration thematic amid signs of more entrenched disinflation pressures is a key factor underpinning gold strength,” OCBC FX strategist Christopher Wong said.
Data on Wednesday showed U.S. producer prices fell more than expected in December, offering evidence that inflation was receding and in turn, giving ammunition to bets that the Fed may slow its rate hikes.
“It is possible for gold to hit US$2,000 this year, but for that we need to see a downshift in hawkish tone from the Fed to confirm current market rate-hike expectations,” said IG Market strategist Yeap Jun Rong.
With lower rates translating into lesser returns on interest-bearing assets like government bonds, investors may prefer zero-yield gold.
“There are signals that show the U.S. is probably heading into a recession, this will favour gold,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.
Silver gained 0.4% to US$23.93 per ounce. Platinum fell 0.9% to US$1,023.88 and palladium lost 0.6% to US$1,744.72, with both metals heading for a second straight weekly drop.
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