By Ashitha Shivaprasad
(Reuters) – Gold prices held gains on Friday after data showed that U.S. inflation rose in line with expectations, but the safe-haven metal was on track for a weekly fall as some geopolitical risk premiums eased.
Spot gold was 0.6% higher at $2,344.64 per ounce by 9:26 a.m. ET (1326 GMT). However, prices were poised to mark their worst week since December after a major escalation in the Middle East crisis was avoided.
U.S. gold futures rose 0.6% to $2,356.90.
The U.S. personal consumption expenditures (PCE) price index increased 0.3% last month, in line with forecasts, a development that is unlikely to change expectations that the Federal Reserve will hold off cutting interest rates until September.
U.S. Treasury yields slipped after the data was released, making bullion more attractive. [US/]
The data continues to suggest “stubborn inflation is likely to stay, but gold’s reaction suggests that the markets have already priced this in,” said Tai Wong, a New York-based independent metals trader.
Gold’s trajectory “depends on overall risk-asset sentiment and buying volume from the Far East. I see a consolidative phase $2,300-$2,400 in the short term,” he added.
Markets initially expected the first U.S. rate cut to come in March, then June and now in September amid strong national economic data.
While gold is traditionally considered a hedge against inflation, higher interest rates reduce the appeal of holding non-yielding bullion.
“Recently, the hawkish signals from the U.S. have more or less bounced off the gold price. If this is no longer the case and expectations of a late interest rate turnaround in the U.S. get entrenched, gold could slide further,” Commerzbank said in a note.
China’s gold consumption in the first quarter climbed nearly 6% from a year earlier, the country’s Gold Association said. [GOL/AS]
Spot silver rose 0.5% to $27.59 per ounce, platinum lost 0.3% at $911.73, and palladium fell 1.6% to $958.50.
Impala Platinum said the restructuring of its South African operations could lead to 3,900 job losses as it battles low metal prices.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Devika Syamnath)
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