Gold sees minor dip in early trade but remains on course to finish the week strong

9 Jun 2023 , 11:00 AM

Although bullion was on course for a weekly gain on speculation that the U.S. Federal Reserve may delay rate hikes in its meeting next week, gold prices dipped on Friday after a more than 1% rise in the previous day.

Spot gold was down 0.2% to $1,964.52 per ounce, although it was still on track for a 0.8% weekly gain. American gold futures remained stable at $1,979.50.

Following news that U.S. weekly jobless claims spiked last week, gold prices increased by more than 1% on Thursday, confirming anticipation that the Federal Reserve will halt its cycle of interest rate hikes.

The dollar index was headed for a second consecutive weekly decline and was trading near the session lows. For foreign buyers, gold is more affordable when the currency is weaker.

Attention now switches to the U.S. consumer inflation report for May, which is scheduled on June 13 and will give investors more insight into the condition of the biggest economy in the world.

The U.S. Federal Reserve and other international central banks were urged on Thursday by the International Monetary Fund to 'stay the course' on monetary policy and keep vigilance against inflation.

According to the CME FedWatch tool, markets are pricing in a 71.3% chance of the Fed keeping interest rates unchanged next week. But the likelihood of an increase in interest rates in July is currently 51%.

Although interest rate increases increase the opportunity cost of owning non-yielding bullion, gold is nevertheless seen as an inflation hedge.

Meanwhile, the U.S. central bank said on Thursday that banks' emergency borrowing from the Fed increased slightly in the most recent week.

Platinum remained unchanged at $1,009.84 while spot silver increased 0.1% to $24.2604 per ounce. To $1,359.54, palladium dropped 0.2%.

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