Gold set for fourth weekly fall on U.S. inflation jitters

Gold prices were set for a fourth straight weekly fall on Friday as caution prevailed ahead of U.S. inflation data that could prompt the Federal Reserve to scale back its bond purchases at a faster pace.

Spot gold was flat at $1,774.39 per ounce by 0613 GMT. U.S. gold futures were steady at $1,776.60.

Bullion prices have fallen 0.5% so far in the week as investors exercised caution before the U.S. Consumer Price Index report, due at 1330 GMT, and the Fed policy meeting next week.

“Gold is defending the lower end of the $1,770-$1,810 range because investors are worried about a hawkish Fed pivot, but there’s still enough uncertainty around the Omicron variant, which could delay rate hiking cycles, to support gold,” said Stephen Innes, managing partner at SPI Asset Management.

“Markets are already pricing in three rate hikes for 2022, so the bar for a hawkish surprise is high and that’s why longer-term gold investors aren’t so worried about the taper, though it could weigh on gold in the near-term.”

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest-bearing bullion.

Spot gold may retest a resistance at $1,789 per ounce, a break above which could lead to a gain to $1,805, according to Reuters technical analyst Wang Tao.

Investors also took stock of U.S. jobless claims dropping to their lowest in more than 52 years last week as labour market conditions continued to tighten amid an acute shortage of workers. 

Spot silver fell 0.2% to $21.89 per ounce and was headed for a fourth consecutive weekly drop.

Platinum rose 0.5% to $938.95 per ounce and was on track for its first weekly gain in four. Palladium fell 0.6% to $1,801.86.

Source: Reuters