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Gold prices dipped on Friday after climbing more than 1% in the previous session, although hopes of a likely pause on interest rate hikes by the U.S. central bank kept bullion on track for a weekly gain.
Gold, like many other assets, has been rangebound, with traders unwilling to push too many boundaries with the U.S. Federal Reserve meeting just around the corner, said Tim Waterer, chief market analyst, KCM Trade.
“The slight pullback today is natural after a spike higher in terms of price consolidation and some profit-taking.”
The dollar index hovered close to Thursday’s lows. A weaker dollar makes gold less expensive for overseas buyers.
Focus now shifts to the U.S. consumer inflation report for May, due on June 13, ahead of the Fed meeting, which will provide investors more clarity about the health of the world’s largest economy.
The International Monetary Fund on Thursday urged the U.S. Fed and other global central banks to “stay the course” on their monetary policy paths and remain vigilant in combating inflation.
The overall trend in gold remains positive and prices are waiting for another trigger to move higher, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
Markets are pricing in a 76% chance of the Fed standing pat next week, after having raised at every meeting since March 2022. Still, the odds of a 25 basis point rate hike in July is 51%.
Rate hikes raise the opportunity cost of holding non-yielding bullion.
Platinum rose 0.3% higher to $1,013.53 and was set to post a weekly gain after two weeks.