By Anushree Mukherjee
(Reuters) – Gold prices eased on Friday and were set to post their biggest weekly drop since November due to a stronger dollar, while investors awaited a key U.S. inflation data for cues into the Federal Reserve’s monetary policy trajectory.
Spot gold was down 0.4% at $2,864.33 an ounce, as of 0459 GMT.
Bullion is down 2.5% so far for the week after logging eight straight weekly gains. However, prices are up 2.2% for February.
U.S. gold futures eased 0.7% to $2,875.00.
The dollar index was set for a weekly gain of 0.7%, making greenback-priced gold more expensive for foreign buyers. [USD/]
“While gold is deemed as a safe-haven, the uncertainty on the trade front may still see profit-taking activities extend further, amid a stronger U.S. dollar,” said IG market strategist Yeap Jun Rong.
U.S. President Donald Trump said on Thursday his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4 along with an extra 10% duty on Chinese imports because deadly drugs are still pouring into the U.S. from those countries.
Gold is seen as a hedge against political risks and inflation, but higher interest rates dampen the non-yielding asset’s appeal.
Investors now await the Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation measure, due at 1330 GMT.
“I do not think rate pricing will see any significant shift, with several components in the CPI and PPI suggesting that the PCE inflation could remain under control and hence, may not sway rate expectations as much,” Yeap said.
Philadelphia Federal Reserve Bank President Patrick Harker on Thursday expressed support for continuing to hold short-term borrowing costs in the current range of 4.25%-4.50.
Spot silver fell 0.2% to $31.19 an ounce, platinum lost 0.1% to $948.05 and palladium eased 0.2% to $917.46. All three metals are down for the month so far.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Rashmi Aich and Eileen Soreng)
