NEW YORK: Gold steadied on Friday and remained on track for a third straight weekly gain, with spot bullion holding near $4,764.54 an ounce and June U.S. gold futures around $4,787.80. The metal was up about 1.8% for the week, extending a rebound that gathered pace after a sharp slide in March. Expectations for lower U.S. interest rates later this year supported bullion, while a firmer dollar limited the advance and kept prices below the highs reached earlier this year.
Bullion had climbed more than 1% in the previous session, rising as high as $4,789.67 in the spot market, as investors weighed the fragile ceasefire between the United States and Iran and the risk of renewed disruption around the Strait of Hormuz. The move reflected continued demand for defensive assets even as energy markets cooled. Brent crude has fallen more than 11% this week, but tensions in the region remained a key factor in broader market positioning across commodities, currencies and government bonds.
Investors were also focused on U.S. inflation data due later Friday, with the March consumer price index expected to show a sharp monthly rise after higher energy prices pushed up fuel costs. That followed data showing the personal consumption expenditures price index rose 2.8% year on year in February, while core PCE, which excludes food and energy, increased 3.0%. The combination kept attention on the Federal Reserve and reinforced the link between inflation, interest rates and demand for non-yielding gold.
Rate Outlook Supports Prices
Derivatives markets moved to reflect a greater chance of policy easing by year end, with the implied probability of at least one quarter-point rate cut by December rising to 31% from 20% a day earlier. That shift helped support bullion even after minutes from the Federal Reserve’s March 17-18 meeting showed officials remained concerned about inflation risks. The central bank kept its benchmark rate unchanged at 3.50% to 3.75% at that meeting, and its next policy decision is scheduled for April 28-29.
The rate backdrop has become more important because gold remains below levels seen before the latest Middle East conflict intensified. Spot bullion is still about 10% lower than where it traded when the conflict began on Feb. 28, despite this week’s recovery. Lower oil prices eased some inflation pressure in markets, but they did not remove uncertainty over regional shipping, energy flows and the broader economic impact of supply disruptions, all of which have kept safe-haven demand in place.
Official Buying Adds Support
Underlying demand from central banks also continued to support the market. The People’s Bank of China increased its gold holdings for a 17th straight month in March, lifting reserves to 74.38 million fine troy ounces from 74.22 million in February. The value of those holdings fell as gold prices dropped during March, but the increase in volume underscored continued official-sector accumulation. That steady buying has remained one of the clearest structural supports for bullion during periods of heightened volatility.
Gold’s third weekly gain leaves the market balancing two confirmed forces: persistent geopolitical risk and a renewed focus on the path of U.S. interest rates. With inflation data due later Friday and the next Federal Reserve meeting set for late April, bullion entered the end of the week with support from defensive demand, central bank purchases and stronger expectations for eventual policy easing – By Content Syndication Services.