Gold prices were set to end a three-week winning streak on Friday due to higher-than-expected U.S. inflation data, which led traders to reconsider the Federal Reserve’s potential interest rate cuts for the year. As of 03:38 GMT, spot gold was slightly up by 0.1 percent at $2,163.92 per ounce, but it was on track to experience a weekly decline of over 0.6 percent, its first since mid-February. U.S. gold futures remained steady at $2,168.00.
Read more: Gold dips as dollar strengthens, traders await additional U.S. data
24-karat gold in Saudi Arabia on Friday, March 15 dropped to SAR2.968. Furthermore, the 10 grams of 24-k gold is being sold for SAR2.548 in the Kingdom while the per ounce gold price stands at SAR7.924.
Hugo Pascal, a precious metals trader at InProved, stated that with the surprising increase in inflation, it is difficult to ignore the impact on gold. He also mentioned that there are no immediate catalysts to push gold above the significant resistance level of $2,200 in the short term.
Rising U.S. producer prices and inflation pressure Fed
The rise in U.S. producer prices in February, along with indications of persistent inflation in consumer data earlier in the week, has intensified the pressure on the Federal Reserve to maintain higher interest rates. This has weighed on non-yielding assets like gold while increasing the attractiveness of bonds, thus strengthening the dollar. The 10-year Treasury yields have risen by approximately 20 basis points to 4.2824 percent so far this week, and the dollar index has gained more than 0.7 percent, marking its most significant weekly increase since mid-January. A stronger U.S. dollar makes gold relatively more expensive for holders of other currencies.
U.S. retail sales show rebound, but below expectations
Additional data revealed that U.S. retail sales rebounded in the previous month, albeit falling below analyst estimates. Moreover, there was a decrease in the number of individuals filing for unemployment claims.
According to LSEG’s rate probability app, traders have reduced the likelihood of a rate cut during the U.S. Federal Reserve’s June meeting to 61 percent from approximately 75 percent the previous Friday. As for 2024, the market now expects around three rate cuts, down from the initial estimate of three to four cuts.
Other metals
While spot platinum decreased by 0.4 percent to $927.35 per ounce and palladium dropped by 0.2 percent to $1,066.86, silver saw a 0.6 percent increase to $24.97. All three metals were expected to achieve a weekly gain.
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