Gold prices eased on Friday after a more than 1% climb in the previous session, although bullion was on track for a weekly gain on bets that the U.S. Federal Reserve may pause rate hikes in its meeting next week.
FUNDAMENTALS
* Spot gold inched 0.2% lower to $1,964.52 per ounce by 0041 GMT, but headed for a 0.8% weekly rise. U.S. gold futures held steady at $1,979.50.
* Gold prices climbed more than 1% on Thursday after data showed U.S. weekly jobless claims surged last week, cementing expectations that the Federal Reserve will pause its interest rate-hiking cycle.
* The dollar index hovered close to the previous session’s lows and was on track for a second weekly fall. A weaker dollar makes gold less expensive for overseas buyers.
* Focus now shifts to the U.S. consumer inflation report for May, due on June 13, ahead of the Fed meeting, which will provide investors with more clarity about the health of the world’s largest economy.
* The International Monetary Fund on Thursday urged the U.S. Federal Reserve and other global central banks to “stay the course” on monetary policy and remain vigilant in combating inflation. * Markets are pricing in a 71.3% chance of the Fed standing pat next week, the CME FedWatch tool showed. Still, the odds of a interest rate hike in July are now 51%.
* While gold is considered a hedge against inflation, interest rate hikes raise the opportunity cost of holding non-yielding bullion.
* Meanwhile, emergency borrowing from the Fed by banks rose slightly in the latest week, the U.S. central bank reported on Thursday.
* Spot silver rose 0.1% to $24.2604 per ounce, while platinum was flat at $1,009.84. Palladium fell 0.2% to $1,359.54.