Gold prices were set on Friday for their worst week in more than a month, as the dollar and Treasury yields strengthened after U.S. central bankers pushed back against expectations of early rate cuts amid signs of resilience in the economy.
FUNDAMENTALS
* Spot gold edged 0.1% higher to $2,023.52 per ounce by 0158 GMT. However, it has fallen 1.2% so far in the week.
* U.S. gold futures rose 0.2% to $2,025.40.
* The U.S. dollar index was down 0.2% for the day but up nearly 1% so far this week. A stronger dollar makes greenback-denominated gold more expensive for foreign currency holders.
* Yields on the benchmark U.S. 10-year Treasury notes touched a fresh five-week high of 4.1632%.
* Data released on Thursday showed jobless claims in the U.S. fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January. * Atlanta Federal Reserve President Raphael Bostic said he was open to lower rates sooner than he had anticipated, depending on how quickly inflation falls, but that the baseline was for rate cuts to start in the third quarter.
* Markets were betting on 139 basis points of Fed rate cuts this year, down from 150 bps a week earlier, according to LSEG’s interest rate probability app, IRPR.
* The odds of a Fed rate cut in March have dropped to 54% from about 71% last week, according to IRPR.
* Lower interest rates decrease the opportunity cost of holding bullion. * The European Central Bank warned in minutes from its most recent meeting that it was far too soon to discuss policy easing.
* Spot silver rose 0.1% to $22.76 per ounce, platinum climbed 0.2% to $908.65, and palladium gained 0.8% to $945.24.