Gold set for weekly gain on Fed pause bets

Gold prices were set on Friday for their biggest weekly gain in nearly two months, as hopes of a pause in the U.S. central bank’s policy tightening campaign bolstered bullion’s appeal.

FUNDAMENTALS

* Spot gold was flat at $1,976.09 per ounce, as of 0030 GMT. U.S. gold futures ticked down 0.1per cent to $1,993.40. 

* Bullion has gained 1.5 per cent so far in the week, heading for its biggest rise since the week ended April 7.

* U.S. central bankers should not raise interest rates at their next meeting, Philadelphia Federal Reserve President Patrick Harker said on Thursday, even though high inflation is coming down at a “disappointingly slow” pace.

* Markets now see a 79.6per cent chance of rates remaining unchanged in June. Gold, which does not yield any interest of its own, loses appeal when interest rates rise.

* The yield on benchmark U.S. 10-year Treasury notes was down to 3.605per cent, while the dollar index was unchanged.

* The U.S. Senate is on track to pass a bill to lift the government’s $31.4 trillion debt ceiling late on Thursday, Democratic Majority Leader Chuck Schumer said, adding, “We are avoiding default tonight.”

* U.S. worker productivity slumped in the first quarter, though not as steep as initially thought, according to government data, which also showed sharp downward revisions to labour costs last quarter and in the final three months of 2022.

* Euro zone inflation remains too high, so further European Central Bank policy tightening is necessary, even if there is a growing body of evidence that past rate hikes are staring to work, ECB President Christine Lagarde said.

* Spot silver was down 0.2per cent to $23.8639 per ounce, but up 2.3per cent for the week.

* Spot platinum fell 0.2per cent to $1,004.41 per ounce, while palladium held steady to $1,395.71.