Gold heads for second weekly loss on strong US economic indicators

GOLD prices edged higher on Friday (Jan 26), but were on track for their second consecutive weekly fall as data indicating strong growth in the United States economy kept the dollar firm, while the focus shifted to a key inflation print due later in the day. Spot gold was up 0.1 per cent at US$2,021.79 per ounce by 0155 GMT. The contract has lost 0.4 per cent so far this week. US gold futures rose 0.2 per cent to US$2,021.70. The US economy grew faster than expected in the fourth quarter as inflationary pressures subsided amid strong consumer spending. Bullion slightly trimmed its losses for the week on Thursday after the US GDP data highlighted that the pace of inflation slowed and bond yields dropped. A private survey earlier this week showed the US economy kicked off 2024 on a strong note, with business activity picking up in January and inflationary pressures appearing to abate. The US dollar index rose 0.2 per cent for the week, hovering near a six-week high, making bullion less attractive to other currency holders. The European Central Bank kept interest rates unchanged at a record-high 4 per cent and ECB President Christine Lagarde said it was “premature to discuss rate cuts” but noted that risks to economic growth are “tilted to the downside”. Markets widely expect the US Fed to stand pat on rates at its policy meeting on Jan 30 to 31, but attention will largely be on comments from chair Jerome Powell. Traders are betting on a 93 per cent chance for a rate cut by May, according to LSEG’s interest rate probability app IRPR. Focus now shifts to the Fed’s favourite inflation gauge – the personal consumption expenditure data – due at 1330 GMT. Lower interest rates decrease the opportunity cost of holding bullion. Spot silver fell 0.2 per cent to US$22.87 per ounce, platinum dipped 0.1 per cent to US$890.76, and palladium edged 0.1 per cent lower to US$939.64. REUTERS