Gold prices retreat as investors await key US inflation data

Yahoo

5 days ago

Gold prices edged lower on Friday, on track for a nearly 2% weekly decline, as traders positioned themselves ahead of a closely watched US inflation report.
Gold futures were down 0.7% to $3,320.20 per ounce at the time of writing on Friday morning, while the spot gold price slipped 0.1% to $3,295.14 per ounce.
The move came as investors awaited the release of the personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation, later in the day.
Technical dynamics also contributed to the pullback, according to Kelvin Wong, senior analyst at Oanda Asia Pacific.
'The price action in gold has twice failed to break above the key near-term resistance level of $3,328 — both in the US session yesterday and again early in the Asian session today,' he said.
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Still, the broader investment case for gold remains intact. The precious metal's haven appeal was boosted by renewed uncertainty over Donald Trump's trade agenda, after a US federal appeals court on Thursday granted the US president a temporary reprieve from a ruling that threatened to upend much of his planned tariffs.
Goldman Sachs (GS) this week reaffirmed its view that bullion, alongside crude oil, remains a key inflation hedge for long-term portfolios.
Oil prices inched higher on Friday but remained on course for a second straight weekly decline, pressured by expectations of increased supply from OPEC+ and renewed uncertainty surrounding US trade policy.
Brent crude futures climbed 0.1% to $63.46 a barrel, while West Texas Intermediate futures rose 0.2% to $61.06 a barrel. However, both contracts have fallen 1.3% so far this week.
The pressure on prices stemmed largely from concerns over rising output. Investors are anticipating that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will move forward with another production increase when eight of its members meet on Saturday.
Analysts expect prices to stay within recent ranges in the short term, before potentially easing into the high $50s by the end of the year.
Meanwhile, in the US, oil markets were further unsettled after a federal appeals court on Thursday temporarily reinstated tariffs introduced by Trump. The move reversed a trade court's decision a day earlier that had ordered an immediate block on the most extensive of the duties.
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The legal back-and-forth sent oil prices tumbling more than 1% on Thursday, as traders recalibrated expectations in light of continued policy uncertainty. Analysts warned that further volatility is likely as the dispute winds through the courts.
Since Trump unveiled his so-called "Liberation Day" tariffs on 2 April, oil prices have shed more than 10%.
The pound held steady against the dollar on Friday, trading at $1.3479, as investors adopted a cautious stance ahead of the release of the US personal consumption expenditures (PCE) price index.
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The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, rose 0.3% to $99.53, bolstered by safe-haven demand and anticipation of the inflation print.
'Sterling is on track for its fourth monthly rise on the trot versus the dollar, its longest monthly winning streak in over two years with a cumulative gain of over 10%,' said George Vessey, lead FX and macro strategist at Convera. 'Historically, GBP/USD has suffered a down month following such an aggressive move higher. But we note that June exhibits no meaningful seasonality trend, and with dollar demand tepid amidst ongoing uncertainty regarding the US trade story and fiscal policy stability — the pound could extend higher into the summer.'
Vessey added that Convera's upside scenario — which sees sterling reaching $1.40 by year-end — assumes continued weakness in the US currency driven by 'the erosion of confidence in US policy making' and 'deteriorating US economic data'. However, he cautioned that such a rally would also require a resilient UK economy and a more hawkish stance from the Bank of England, making forthcoming inflation data 'crucial'.
'In the very near term though, month-end flows could create some temporary selling pressure for sterling, given its strong month-to-date performance across both an aggregate and cross-border basis,' he said.
In other currency moves, the pound was higher against the euro (GBPEUR=X), trading at €1.1886 at the time of writing.
The FTSE 100 (^FTSE) was up 0.6% at 8,768 points. For more details, check our live coverage here.