Gold prices fell on Friday even as the dollar lost ground against a basket of major rivals, with the precious metal marking a weekly loss.

The decline came after the release of the Federal Reserve’s last meeting minutes, which showcased the concerns of the members regarding persistently high inflation rates.

Thus it’s now less likely that the Fed will start cutting interest rates in the summer. 

Earlier data from the University of Michigan showed the consumer confidence index fell 10.5% m/m to 69.1 from 77.2 in April. 

Otherwise, the dollar index fell 0.3% as of 21:27 GMT to 104.7, with a session-high at 105.1, and a low at 104.6. 

On trading, gold spot prices fell 0.1%, or $1.60 to $2335 an ounce, while marking a weekly loss of 3.5%. 

US stock indices rose on Friday amid attempts to recoup some of the hefty losses sustained yesterday due to uncertainty about Fed’s policies. 

The Fed’s meeting minutes showed continued concerns about inflation. 

Such concerns from Fed officials likely mean there won’t be an interest rate cut in the summer. 

On trading, Dow Jones rose 0.1%, or 31 points as of 15:55 GMT to 39,096, while S&P 500 rose 0.6%, or 30 points to 5,297, as NASDAQ rallied 0.8%, or 140 points to 16,876. 

Dollar fell in European trade on Friday against a basket of major rivals, giving up one-week highs and on track for the first loss in seven days on profit-taking.

Despite the decline, the greenback is heading for the best weekly profit in a month and a half after the Fed's latest meeting minutes reduced the odds of multiple rate cuts this year. 

Now investors await important remarks by Fed official Christopher Waller later today in addition to consumer sentiment and US inflation data. 

The Price

The dollar index fell 0.2% today to 104.82, with a session-high at 105.12. 

The index rose 0.15% on Thursday, the sixth profit in a row, marking a one-week high at 105.12 following strong US data.

Weekly Trades 

The index is up 0.5% so far this week on track for the second weekly profit in three weeks, and the largest since early April.

Fed’s Minutes 

The minutes showed that Fed officials are concerned about the suitable timing of a rate cut, with several members expressing concerns about consumers using riskier financing methods to cover costs due to inflation.

Fed officials pointed to the persistent risks of inflation, with factors including geopolitical events, and they focused on the impact on consumers, especially low-income workers. 

The Fed recently announced a decision to maintain interest rates unchanged at below 5.5% at the May meeting. 

Strong Data

Recent US data showed unemployment claims fell more than expected last week while both the services and manufacturing sectors expanded. 

US Rates

The odds of a Fed July 0.25% rate cut are currently standing at 14%, while the odds of a September cut fell to 54%. 

According to the Fedwatch tool, investors now only expect one interest rate cut by the Federal Reserve this year. 

Waller

Later today, Famously hawkish Fed official Christopher Waller is expected to speak later today about the future of inflation and interest rates.

Otherwise, the University of Michigan will release important data on consumer sentiment and five-year inflation forecasts. 

Sterling fell in European trade on Friday against a basket of major rivals, extending losses for the second day against the US dollar and moving away from two-month high on profit-taking, following grim UK data. 

Earlier UK data showed the economy might be shrinking faster than expected, which could prompt the Bank of England to accelerate plans to ease policies. 

The Price

The GBP/USD fell 0.2% to $1.2676, with a session-high at $1.2700. 

The pair lost 0.15% yesterday, the first loss in five days away from a two-month high at $1.2761. 

Grim Data

Earlier UK data showed retail sales fell 2.3% in April, the worst pace since December, and passing estimates of a 0.5% drop.

The data shows the UK GDP is likely shrinking faster than expected in the second quarter, as retail sales and consumer spending represent over 70% of total GDP.

UK Rates

There’s now a 50% chance the Bank of England will cut interest rates in June, and an 80% chance of such a cut in August.

Interest Rate Gap 

The current UK-US interest rate gap stands at 25 basis points in favor of the US, the lowest such gap since March 2022, and it’ll likely widen to 50 basis points in June if the BOE went ahead with an interest rate cut, in turn weighing on the pound.