Gold faces weekly loss on bets US interest rates will be higher for longer

GOLD prices on Friday (Jul 7) were on track for a fourth consecutive weekly loss as investors bet the Federal Reserve will keep interest rates higher for longer, weighing on non-yielding bullion.

Spot gold held steady at US$1,911.85 per ounce by 0023 GMT, but was down 0.4 per cent for the week. US gold futures ticked up 0.1 per cent to US$1,917.70.

US private payrolls increased more than expected in June, indicating strength in the labour market despite growing risks of a recession from higher interest rates.

Fed Bank of Dallas president Lorie Logan said there was a case for a rate rise at the June policy meeting, in comments that affirmed her view that more rate increases will be needed to cool off a still-strong economy.

Gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Investors now see a 92 per cent chance of a 25-basis-point hike in July after last month’s pause, according to CME’s Fedwatch tool.

Further weighing on gold, the yield on 10-year Treasury notes climbed to its highest since Mar 2 after the labour market data on Thursday.

Investors will now scan Friday’s US nonfarm payrolls report for more clarity on the Fed rate-hike path, as they keep a close watch on US Treasury Secretary Janet Yellen’s Beijing visit amid renewed tensions.

Elsewhere, the Bank of Japan deputy governor Shinichi Uchida vowed to keep its yield curve control policy for now, the Nikkei newspaper reported on Friday.

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Spot silver fell 0.2 per cent to US$22.6994 per ounce, platinum was little changed at US$901.18.

Palladium shed 0.2 per cent to US$1,238.87 but headed for a 1 per cent weekly gain. REUTERS