Gold bound for weekly gain on Fed rate pause bets


Akos Stiller | Bloomberg | Getty Images

Gold eased on Friday on a stronger dollar, but held close to the previous session’s highs en route to a weekly gain helped by bets that the Federal Reserve could soon pause interest rate hikes.

Spot gold fell 0.3% to $1,962.34 per ounce, but headed for a 0.8% weekly climb, having jumped about 1.5% after a surge in U.S. weekly jobless claims. U.S. gold futures held steady at $1,978.20.

The dollar index was up 0.2%, yet hovered close to Thursday’s lows. A stronger dollar makes gold expensive for overseas buyers.

The market is still looking for a hedge against an economic slowdown, providing some underlying support to gold, said Ole Hansen, head of commodity strategy at Saxo Bank.

“For now, there are no clear signals … but we’ve seen a decent bounce this week and found support in the low $1,930s,” Hansen added.

Higher rates raise the opportunity cost of holding non-yielding bullion.

Focus now shifts to the U.S. consumer inflation report for May, due on June 13, a day before the Fed announces its policy decision.

Markets are pricing in a 76% chance of the Fed standing pat next week, after having raised at every meeting since March 2022, while odds of a 25 bps rate hike in July were 52%, per the CME Fedwatch tool.

“We continue to expect gold to rise over the coming year, supported by a weaker US dollar, strong central bank demand, and safe-haven flows,” analysts at UBS said in a note.