By Seher Dareen
(Reuters) – Gold prices edged up from two-month lows on Friday, helped by a dip in the U.S. dollar as traders assessed the progress of U.S. debt ceiling negotiations and the Federal Reserve’s rate hike path ahead.
Spot gold was up 0.7% to $1,953.03 per ounce at 1002 GMT, while U.S. gold futures were up 0.5% to $1,952.90.
“Today’s moderating U.S. dollar has carved out some breathing space for bullion,” said Han Tan, chief market analyst at Exinity.
“The precious metal’s upside remains capped by the imminent prospects of a U.S. debt deal, coupled with the fact that markets have more room before fully pricing in yet another Fed rate hike by July.”
Bullion slipped to its lowest since March 22 at $1,936.59 earlier and has lost 1.3% so far this week, on course for its third straight weekly decline as the rival safe-haven dollar climbed. [USD/]
The dollar eased on Friday but remained on track for a third straight weekly gain. U.S. President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal, a U.S. official told Reuters.
Investors now await U.S. personal consumption expenditure (PCE) data, often referred to as the Fed’s favoured inflation gauge, at 1230 GMT for more guidance on interest rates.
“Gold finds itself under pressure amid dwindling rate cut speculations,” Commerzbank said in a note.
Markets are pricing in a 41.7% chance of a 25-basis-point interest rate hike in June, while 58.3% expect the Fed to stay pat on rates, according Fed fund futures.
“Gold bugs may well continue languishing in the lead up to next month’s FOMC decision, likely to find it tough to sustain bullion’s recovery until peak U.S. rates are well and truly in,” Tan added.
Spot silver rose 1.5% to $23.12 per ounce, but was on track for a third consecutive weekly dip.
Platinum was up 0.4% to $1,025.03, while palladium jumped nearly 2% to $1,445.57.
(Reporting by Seher Dareen in Bengaluru; Editing by Mark Potter)
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