Gold struggled for momentum in early Asian trading on Friday, as traders awaited key U.S. inflation numbers due later in the day after a slew of strong data prints and hawkish comments from Federal Reserve officials raised bets of more rate hikes.
FUNDAMENTALS
* Spot gold was flat at $1,908.33 per ounce by 0122 GMT. It hit its lowest since mid-March at $1,892.82 on Thursday.
* U.S. gold futures fell 0.1% to $1,916.40.
* The dollar index was steady near a two-week high hit in the previous session, making gold expensive for holders of other currencies. [USD/]
* U.S. data on Thursday showed a resilient labour market, while gross domestic product for the first quarter was revised upward, making a strong case for the Fed to raise rates to bring down inflation.
* While Fed Chair Jerome Powell indicated that the central bank was likely to raise rates at least twice more by year-end, Atlanta Fed Bank President Raphael Bostic said it was clear that inflation had fallen. * Investors now see an 89% chance of a 25-basis point hike in July, according to CME’s Fedwatch tool. High interest rates discourage investment in non-yielding gold.
* Benchmark Treasury yields surged on Thursday. A rise in treasury yields makes gold less attractive by raising the opportunity cost of holding it. [US/]
* Market participants are awaiting personal consumption expenditures (PCE) data for May, with core PCE expected to be 4.7% on a year-on-year basis, well above the Fed’s 2% target.
* Spot silver rose 0.1% to $22.56 per ounce, platinum was up 0.7% at $900.52, and palladium rose 7% to $1,237.31.