Gold prices returned to winning ways on Friday, and are on pace for a second consecutive weekly gain, helped by a pullback in US Treasury yields and growing inflation concerns.
Spot gold rose 0.7% to $1,840.19 per ounce by 12:15 EDT, the highest since late January. US gold futures for April delivery stayed relatively flat at $1,838.80 per ounce.
[Click here for an interactive chart of gold prices]
Meanwhile, benchmark 10-year US Treasury yields backed off after topping 2% for the first time in nearly three years during the previous session.
“Yields are backing off just a touch, so I think gold is just catching its breath right now to figure out what its next move is,” Philip Streible, chief market strategist at Blue Line Futures in Chicago, told Reuters.
Investors are now awaiting more clarity on the pace of policy tightening by the Federal Reserve, which last month signaled its intent to lift interest rates in March, with potentially more frequent, larger rate hikes throughout the year.
The overly hawkish messaging by the Fed pushed bullion below the $1,800 an ounce mark, but since then it has gradually recovered towards the level seen at the beginning of the year.
Data showing a spike in consumer prices has increased pressure on the Fed to take a stronger stand to fight inflation. Fed fund futures are pricing in chance of 50 basis points hike at next month’s policy meeting.
On Thursday, St. Louis Fed Bank President James Bullard stated he wants a full percentage point of rate hikes over the next three policy meetings.
“There is a lot of discussion about possibility of an emergency rate hike. But in addition to multiple rate hikes, other Fed officials have downplayed Bullard’s hawkishness,” Streible said.
“Gold market is just waiting for a lift-off on the Fed. Prices have been trading in a range-bound market around the $1,800 pivot and is technically building support within this range,” Daniel Pavilonis, senior market strategist at RJO Futures, added in the Reuters report.
(With files from Reuters)
