Gold steadies near US$4,000 as inflation data eases rate-hike bets

[SINGAPORE] Gold steadied near US$4,000 an ounce as the latest US inflation gauge tempered expectations for an interest-rate hike, capping a tumultuous week that saw bullion slump to the lowest since November.

Spot gold was little changed in early trading, having clawed back 0.7 per cent in the previous session. Treasury yields dipped on Thursday (Jun 25) after the US personal consumption expenditures price index, the US Federal Reserve’s favoured inflation gauge, rose by a less-than-expected 0.4 per cent in May.

That relieved some pressure on gold, which remained on track for a fourth weekly loss. Bond traders are pricing in slightly lower prospects for a rate hike this year, while the chance of an increase next month dwindled to about one-in-three. Higher borrowing costs are a headwind for non-yielding precious metals.

A gauge of the US dollar also snapped a winning streak on Thursday, after gaining 1.8 per cent since the latest Fed meeting last week, where policymakers signalled support for higher borrowing costs and new chair Kevin Warsh adopted a hawkish tone. A stronger US dollar makes commodities priced in the US currency more expensive for most buyers.

Spot gold was 0.1 per cent lower at US$4,021.88 an ounce at 7.46 am in Singapore. Silver also dipped 0.1 per cent to US$57.80, following a gain of 0.8 per cent on Thursday. Platinum and palladium edged lower.

The Bloomberg Dollar Spot Index was marginally higher. BLOOMBERG