The precious metal fell on Friday and lost 2.7 percent for the week after a closely watched measure of U.S. headline inflation advanced faster than expected. The data raised doubts that the Fed might start lowering borrowing costs anytime soon, sending Treasury yields higher. Higher rates and yields are generally negative for gold because it does not pay interest.
Fed Bank of Chicago President Austan Goolsbee said last week in an interview published Thursday by the Wall Street Journal that the U.S. central bank needs to “recalibrate” following a string of higher-than-expected inflation data.
Still, Thursday’s inflation report, combined with the US gross domestic product report that beat all forecasts, has reignited the possibility of stagflation, which could provide further support for gold.
Investors now await the release of the personal consumption expenditures index, the Fed’s preferred measure of inflation, on Friday. Data is expected to show price pressures remain high in March.
Spot gold, which reached a record high two weeks ago, fell 0.2 percent to $2,328.08 per ounce at 09:12 Singapore time, after closing with a 0.7 percent increase on Thursday. Bloomberg Dollar Spot Index remained flat. While silver declined, palladium and platinum rose.
