Gold on track for third weekly loss as dollar powers up

Gold prices rose in European trade, holding above two-month lows hit earlier in Asian trade amid recovery attempts as dollar slows down. 

The precious metal is heading for the third weekly loss in row as dollar strengthens following bullish remarks by Fed officials, and strong US data. 

Such aggressive remarks remarks by Fed officials bolstered the case for a 0.25% rate hike in June, and hurt chances of early rate cuts in the second half of the year. 

Gold Prices Today

Gold prices rose 0.8% to $1,957 an ounce, with a session-low at $1,936, after losing 0.8% yesterday, the second loss in a row under pressure from the stronger dollar. 

Weekly Trading 

Gold prices in on track for a 1.1% loss this week, the third weekly loss in a row, and the longest such streak of losses this year as dollar powers up. 

The Dollar

The dollar index fell 0.2% on Friday, on track for the first loss in five days away from two-month highs scaled yesterday at 104.31, in turn underpinning dollar-denominated gold futures. 

However, the dollar is on track for the third weekly profit in a row as US 10-year treasury yields power up, with chances of a Fed rate hike in June increasing. 

Fed Remarks

Minneapolis Fed President Neil Kashkari said US interest rates might have to move above 6% to bring inflation below 2%, while Saint Louis Fed President James Bullard said the Fed might need to raise interest rates by another half a percentage point this year. 

Fed member Christopher Waller said the decision on interest rates in June will depend on data released in the next three weeks, adding he doesn't support a pause in policy tightening until there's clear proof that inflation is heading to 2%. 

Positive Data

Recent US data showed strong GDP growth in the first quarter, while unemployment claims rose less than expected last week. 

Now investors await important US consumer spending data later today for April. 

US Rates

Such remarks and data boosted the likelihood of a 0.25% Fed rate hike in June from 13% a week ago to 40% currently. 

US Debt Ceiling 

Intensive negotiations are ongoing between US President Joe Biden and top Congressional Republican Kevin McCarthy to reach a deal on raising the US debt level.

US officials indicated that debt ceiling could be raised for two years, while a ceiling put on most items expect the army and veterans. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 941.29 tones.