Gold rose 0.4% to $2,335 as the dollar slipped, but the metal is still on track for a fourth straight weekly loss. Traders now see a 65% chance of a September Fed rate cut.
Gold prices edged higher Friday. The dollar slipped. The metal remains on track for a fourth straight weekly loss.
Spot gold rose 0.4% to $2,335.20 an ounce in early European trade, recovering some ground after a selloff that has erased roughly 4% since late May. The dollar index eased 0.2% against a basket of major currencies, giving gold a modest lift. A weaker greenback makes dollar-priced bullion cheaper for holders of other currencies.
The move followed U.S. data Thursday showing first-time jobless claims rose more than expected, adding to signs the labor market is cooling. Traders are now pricing in a roughly 65% chance the Federal Reserve cuts rates by September, up from about 50% a week ago, according to CME FedWatch data. Lower rates reduce the opportunity cost of holding non-yielding gold.
The weekly loss reflects a broader shift. Gold has fallen from a record $2,450 an ounce hit May 20, pressured by hawkish Fed minutes and stronger-than-expected U.S. economic data earlier in the month. The minutes showed some officials were open to raising rates further if inflation persisted.
Physical demand has offered little support. Top consumer China reported weaker gold imports in April. Indian buying remains subdued ahead of the monsoon season. Central bank purchases, a key driver of gold's rally this year, have slowed after a months-long buying spree.
ETF flows tell a similar story. Holdings in the world's largest gold-backed ETF, SPDR Gold Trust, have fallen 1.5% this week, extending a trend of outflows that began in mid-May.
On the technical side, gold is testing support near $2,300, a level that held during the April pullback. A break below that could open a run toward $2,200, traders said. Resistance sits at $2,380, the 50-day moving average.
Gold's next test comes with Friday's U.S. personal consumption expenditures price index, the Fed's preferred inflation gauge. A hot print would reinforce the case for rates to stay higher, pressuring gold further. A soft reading could revive the rally.
The safe-haven bid that pushed gold to records in April and May has faded as Middle East tensions eased, traders said. The metal now trades on rate expectations, which have turned decisively against bullion in recent weeks.
For a broader view of the sector, see the gold profile page.
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