Silver prices rose in European trade for the first time in five days off two-month lows hit earlier in the Asian session, while still heading for the third weekly loss in row. 

The weekly loss came as dollar powered up against rivals following bullish remarks from Fed officials and strong US data, boosting the case for a 0.25% rate hike in June.

Silver Prices Today

Silver prices rose 2% to $23.19 an ounce, with the lowest since March 22 at $22.67.

Silver lost 1.5% yesterday, the fourth loss in a row, and the longest such streak of daily losses since February. 

Silver also fell 3% so far this week on track for the third weekly loss in a row. 

Silver prices are down a heavy 7.5% in May so far due to concerns about weak industrial demand on the white metal, and worries about the Chinese economy. 

US Dollar

The dollar marked two-month highs yesterday against a basket of major rivals before declining today on profit-taking ahead of US personal spending data. 

Such gains heaved pressure on the prices of metals and commodities denominated by the dollar, especially silver and gold, and made them costlier to holders of other currencies. 

Some Fed officials took a very bullish stance and pointed to the need for more policy tightening in order to bring inflation down to 2%. 

Earlier Washington data showed the US economy grew better than expected in the first quarter of the year, while unemployment claims were below estimates last week. 

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.

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. 

Euro rose in European trade on Friday for the first time in four sessions against dollar amid attempts to recover from two-month lows, while on track for the third weekly loss in row on concerns about a widening policy gap between the US and Europe. 

Recent bullish remarks by Fed officials bolstered the case for a 0.25% rate hike in June, in addition to a spate of solid US data. 

EUR/USD rose 0.2% to 1.0743, with a session-low at 1.0717, after losing 0.2% on Thursday, the third loss in a row, hitting two-month lows at 1.0707 following strong US data.

Euro is down 0.6% so far this week on track for the third weekly loss in a row, the longest such streak of weekly losses this year.

European Rates

Despite assertions from the European Central Banks on extended policy tightening, doubts are mounting on whether the ECB will raise interest rates further this year.

The ECB remains one of the slowest major central banks in raising interest rates, placing sixth in the G8 major currency regions.

Now investors await crucial European inflation data next week to better gauge the path ahead for policies in Europe.

The Dollar

The dollar index fell 0.2% on Friday, the first such decline in five sessions away from two-month highs at 104.31 on active profit-taking.

Most remarks by Fed officials were highly bullish, showing that the battle with inflation in the US is still ongoing.

Recent strong US GDP growth data in the first quarter and unemployment claims also boosted the chances of a Fed rate hike in June.

Markets are pricing in a 40% chance of a 0.25% Fed interest rate hike in June, up from 31%.

Policy Gap

The ongoing interest rate gap between the US and Europe is standing at 150 basis points, and it might grow even further next month. 

US stock indices were mixed on Thursday amid ongoing uncertainty about the US debt ceiling crisis. 

Fed's Minutes

The Federal Reserve's meeting minutes showed division between officials on the need for further increases to interest rates, with some members expressing the need to, and others calling for a tapering off.

The Federal Reserve decided earlier this month to raise interest rates by 25 basis points, but the minutes shed light on the divisions about the next stop, with the overall tone pointing to a pause in policy tightening.

At the last meeting, Federal Open Market Committee officials decided to remove a major passage off the manifest, which pointed to the need to maintain current monetary policies.

The Fed is now depending more on fresh data to decide the next move.

Overall, members expressed uncertainty on whether upcoming policy tightening is useful, with the discussions ending with two potential scenarios:

The first was the view of some members that inflation reduction has been unacceptably slow, and thus there's a need for more rate hikes.

The second was the view of some members who pointed to a slowdown in growth, which necessitates a pause to policy tightening.

Debt Ceiling 

White House and Congressional officials continue to hold meetings to further negotiate after the failure of the previous talks to reach a compromise on raising the debt ceiling.

US President Joe Biden will extend talks with Congressional leaders later this week in a race to a catastrophic default on debt next week.

Many sticking points remain between both sides, with US Treasury Secretary Janet Yellen reiterating warnings from a potential default on payments next June, which would threaten the credit rating for the US and tip the economy into recession.

In a sign of danger, Fitch Ratings said the US credit rating is under negative review, which might lead to a downgrade. 

Otherwise, recent US data showed unemployment claims rose to 229 thousand last week from 225 thousand, while analysts expected 249 thousand. 

US GDP grew 1.3% in the first quarter, beating estimates of 1.1%.

On trading, Dow Jones fell 0.3%, or 92 points to 32,707 as of 15:38 GMT, while S&P 500 rose 0.5%, or 21 points to 4,136, as NASDAQ rose 1.2%, or 151 points to 12,635.