Gold prices held on to gains on Friday after data from the Fed’s closely watched personal consumption expenditure index confirmed the persistence of US inflationary pressures.
Spot gold was up 0.3% at $2,338.65 an ounce, while U.S. gold futures were 0.2% higher at $2,347.2.
The US personal consumption expenditure (PCE) price index rose 0.3% last month, a development that bolstered expectations that the US Federal Reserve would delay cutting interest rates until September.
The data continues to show that “stubborn inflation is likely to remain, but gold’s reaction suggests markets have already priced in this development,” said Tai Wong, an independent metals trader based in New York.
While gold is traditionally seen as a hedge against inflation, higher interest rates are making it less attractive. “Latest, hawkish signals from the US are weighing on the gold price. If estimates of a delayed rate cut in the US are confirmed, gold could slide further,” Commerzbank said in a note.
It is recalled that markets initially expected the first cut in US interest rates to come in March, then June and now September amid strong pressure.
Meanwhile, China’s first-quarter gold consumption climbed nearly 6 percent from a year earlier, according to data from the country’s Gold Association.
In other metals, spot silver fell 0.6% to $27.28 an ounce, platinum lost 0.1% to $915.10 and palladium fell 1.9% to $956.25.
