Gold Poised for Weekly Gain on Fed Rate Paused

Gold prices dipped on Friday after climbing more than 1% in the previous session, although hopes of a likely pause on interest rate hikes by the U.S. central bank kept bullion on track for a weekly gain.

Spot gold fell 0.2% to $1,963.41 U.S. per ounce by 05:15 GMT, but headed for a 0.8% weekly rise. U.S. gold futures remained flat at $1,978.60.

The dollar index hovered close to Thursday’s lows. A weaker dollar makes gold less expensive for overseas buyers.

Focus now shifts to the U.S. consumer inflation report for May, due on June 13, ahead of the Fed meeting, which will provide investors more clarity about the health of the world’s largest economy.

The International Monetary Fund on Thursday urged the U.S. Fed and other global central banks to “stay the course” on their monetary policy paths and remain vigilant in combating inflation.

The overall trend in gold remains positive and prices are waiting for another trigger to move higher, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

Markets are pricing in a 76% chance of the Fed standing pat next week, after having raised at every meeting since March 2022. Still, the odds of a 25 basis point rate hike in July is 51%.

Rate hikes raise the opportunity cost of holding non-yielding bullion.

Spot silver rose 0.1% to $24.2435 U.S. per ounce, palladium gained 0.2% to $1,364.90 U.S.

Platinum rose 0.3% higher to $1,013.53 U.S. and was set to post a weekly gain after two weeks.