Gold prices inched down on Friday but stayed on track for a weekly gain, as prospects of the U.S. Federal Reserve lowering borrowing costs dented the dollar and Treasury yields, boosting demand for the safe-haven asset.
FUNDAMENTALS
* Spot gold was down 0.1% at $2,033.29 per ounce, as of 0113 GMT. However, bullion has risen 1.5% so far this week. U.S. gold futures edged 0.1% higher to $2,047.60.
* The Fed left interest rates unchanged on Wednesday and Chair Jerome Powell said the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming “into view”.
* Fed officials estimated 75 basis points (bps) of rate cuts in 2024, with 2.4% inflation at the end of next year. Markets are now pricing in around a 75% chance of a rate cut in March, according to CME FedWatch tool.
* Lower U.S. interest rates put pressure on the dollar and bond yields, and increase the appeal of non-yielding bullion.
* The dollar was heading for a weekly drop after hitting a four-month low on Thursday, making gold less expensive for other currency holders.
* Benchmark U.S. 10-year bond yield, meanwhile, hovered near its lowest level since July.
* The European Central Bank pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.
* Data showed U.S. retail sales unexpectedly rose in November. A separate report showed initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 202,000 for the week ended Dec. 9.
* Spot silver eased 0.3% to $24.07 per ounce, while platinum fell 0.2% to $956.21 and palladium slipped 0.4% to $1,098.13.