Gold was poised for a fourth consecutive weekly decline on Friday, weighed down by a stronger dollar fuelled by expectations of U.S. interest rate increases, as investors also evaluated the tenuous U.S.-Iran peace agreement. Spot gold decreased by 0.1% to $4,022.95 per ounce as of 0046, indicating a potential weekly decline of 3.4%. U.S. gold futures for August delivery declined by 0.2%, settling at $4,038.10. The U.N. International Maritime Organization has halted its operation to escort vessels through the Strait of Hormuz as of Thursday, following an attack report from a ship. This development has reignited concerns regarding the initial U.S.-Iran agreement.
The U.S. dollar index was on track for a consecutive weekly increase, resulting in higher costs for gold for those holding other currencies. Data released on Thursday indicated that U.S. inflation rose in May, surpassing 4.0% for the first time in three years, driven by increased energy prices due to the conflict in the Middle East. Chicago Federal Reserve President Austan Goolsbee noted a “glimmer of hope” regarding services inflation in the most recent inflation report; however, he emphasised that underlying inflation pressures remain excessively high and are moving in an unfavourable direction.
Federal Reserve Bank of New York President John Williams indicated that although inflation pressures are expected to ease this year, they still remain elevated. He also adjusted his outlook regarding the timeline for returning inflation to the Fed’s 2% target. Market participants anticipate three rate hikes from the Federal Reserve this year, with the CME FedWatch Tool indicating a roughly 63% probability of an increase in September.
In May, China’s net gold imports through Hong Kong experienced a significant decline of approximately 38% compared to the previous month. Data from the Hong Kong Census and Statistics Department indicates that imports totalled 53.674 metric tonnes, a decrease from 86.715 tonnes in April. Spot silver decreased by 0.2% to $57.77 per ounce, platinum remained unchanged at $1,600.95, and palladium experienced an increase of 0.4% to $1,188.97. All metals were on track for a weekly decline.