Gold poised for 4th weekly fall on jitters ahead of US inflation

[BENGALURU] Gold prices edged higher on Friday but were headed for a fourth straight weekly fall as investors stayed away from making big bets ahead of US inflation data that could prompt the Federal Reserve to scale back its bond purchases at a faster pace.

Spot gold rose 0.2 per cent to US$1,778.13 per ounce by 0352 GMT. US gold futures gained 0.2 per cent to US$1,779.30.

Bullion prices have fallen 0.4 per cent so far in the week as investors exercised caution before the US Consumer Price Index report, due at 1330 GMT, and the Fed policy meeting next week.

"Gold is defending the lower end of the US$1,770-US$1,810 range because investors are worried about a hawkish Fed pivot, but there's still enough uncertainty around the Omicron variant, which could delay rate hiking cycles, to support gold," said Stephen Innes, managing partner at SPI Asset Management.

"Markets are already pricing in three rate hikes for 2022, so the bar for a hawkish surprise is high and that's why longer-term gold investors aren't so worried about the taper, though it could weigh on gold in the near-term."

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest-bearing bullion.

European Central Bank policymakers are homing in on a temporary increase in the regular bond purchase scheme that would still significantly reduce overall debt buys once a much larger pandemic-fighting scheme ends in March, sources told Reuters.

Investors also took stock of US jobless claims dropping to their lowest in more than 52 years last week as labour market conditions continued to tighten amid an acute shortage of workers.

Spot silver rose 0.3 per cent to US$22.00 an ounce but was headed for a fourth consecutive weekly drop.

Platinum climbed 0.9 per cent to US$942.50, en route to its first weekly rise in four. Palladium gained 0.1 per cent to US$1,814.74.

REUTERS