Gold prices fell on Friday, and were
poised for a weekly loss, as tensions in West Asia
dampened hopes for a US-Iran peace deal amid rising inflation
and interest rate-hike fears.
Spot gold was down 0.5 per cent at $4,452.20 per ounce, as of
0225 GMT. It has fallen about 1.8 per cent for the week so far.
US gold futures for August delivery fell 0.6 per cent to
$4,478.50.
The Iran-backed Hezbollah militia rejected a new ceasefire
in Lebanon and Israel said it would not withdraw troops from the
country, undermining US President Donald Trump’s efforts to
halt fighting there to forge peace with Tehran.
“Some pessimism around the resolution of the Iran conflict
has been negative for gold,” said Nicholas Frappell, global head
of institutional markets at ABC Refinery. “I think the trend is
to expect tighter interest rate markets, which is also weighing
on gold.”
Kansas City Federal Reserve President Jeffrey Schmid said on
Thursday that the US central bank’s choice now is between
being patient and holding interest rates steady or hiking rates
to tamp down inflation that has been above target for years.
Meanwhile, San Francisco Fed President Mary Daly said the
US rate path will depend on how the economy evolves, adding
that monetary policy is “in a good place” and the Fed is
prepared to respond “either way.”
While gold is seen as a hedge against inflation, higher
interest rates tend to weigh on the non-yielding metal.
Markets are pricing in a Fed rate hike before year-end, with
a 51 per cent chance of a move by December, according to CME Group’s
FedWatch tool.
Investors are now awaiting the May US nonfarm payrolls
data, due later in the day, to gauge the Fed’s monetary policy
path.
Spot silver fell 1.4 per cent to $72.89 per ounce, platinum
dropped 1.1 per cent to $1,878.68, and palladium slid 1.7 per cent
to $1,298.45. All metals were headed for a weekly loss.