WASHINGTON: Gold prices eased on Friday, heading for their first weekly loss in ten weeks, as a stronger US dollar and caution ahead of key inflation data dampened investor appetite for the precious metal.
Spot gold slipped 0.2 percent to $4,118.68 per ounce in early trade at 0315 GMT, while US gold futures for December delivery declined 0.3 percent to $4,133.40. The metal has lost about 3 percent so far this week, marking its steepest weekly fall since mid-May.
Strong dollar limits appeal
The dollar index extended its winning streak for a third straight session, rising against major currencies. A stronger dollar typically makes gold more expensive for holders of other currencies, weighing on global demand.
Tim Waterer, Chief Market Analyst at KCM Trade, said the market was seeing less safe-haven buying as geopolitical tensions showed signs of easing. “A meeting between the US and Chinese leaders stands a decent chance of reducing trade tensions, which is helping the dollar and limiting gold’s appeal as a hedge,” he noted.
The White House announced that President Donald Trump will meet Chinese President Xi Jinping next week during his trip to Asia, a move that investors believe could help calm recent friction between the two largest economies.
Focus shifts to inflation report
Market participants are now closely watching the US Consumer Price Index (CPI) report, which is expected to show that core inflation remained steady at 3.1 percent in September. The data release, delayed due to the recent government shutdown, could offer clues on the Federal Reserve’s next policy move.
Investors have already priced in a likely 25-basis-point rate cut at the Fed’s upcoming meeting. “If the CPI data comes in softer, it would support gold by keeping the Fed on course to cut rates again before year-end,” Waterer said. “But if inflation comes in hotter than expected, the dollar may strengthen further, which could pressure gold even more.”
Lower interest rates tend to support gold since they reduce the opportunity cost of holding non-yielding assets like bullion.
Silver followed gold’s lead, dropping 0.6 percent to $48.62 per ounce. The metal has tumbled about 6 percent this week, marking its worst performance since March.
Both metals remain under pressure as investors await clearer signals on global inflation and central bank policy, which are likely to set the tone for precious metals in the weeks ahead.