Gold Holds Near One-Month Lows Amid Firm US Dollar and Yields

Gold prices remained close to one-month lows on Friday, showing limited response to softer-than-expected US inflation data from the previous month. Despite this, gold is set to conclude its seventh consecutive week of decline, as the US dollar and bond yields retain their strength.Around 0347 GMT, spot gold inched up by 0.1% to reach $1,913.95 per ounce. Nevertheless, it lingered near its lowest level since July 7, a point touched earlier in the day. Meanwhile, US gold futures experienced a 0.1% dip, settling at $1,946.20.

In the wake of data revealing a 3.2% year-on-year increase in the US Consumer Price Index (CPI) – falling just below the Reuters poll prediction of 3.3% – gold gained up to 0.8% on Thursday. This ignited speculation that the US central bank might refrain from raising interest rates again in 2023.Interest rate hikes tend to apply downward pressure on gold due to their tendency to elevate bond yields, thus raising the opportunity cost of holding non-yielding gold assets.

However, despite the initial positive response, Matt Simpson, a senior analyst at City Index, noted that the gold market lacked strong conviction in this upward movement. Simpson attributed this hesitancy to lingering concerns over the still-high core CPI figure of 4.7%, which, although slower than anticipated, remains significant. Additionally, comments from Fed member Mary Daly about the uncertainty surrounding the Fed’s next meeting outcome boosted the US dollar’s strength.Gold prices saw a decline of approximately 1.4% over the week, as both the US dollar index and the benchmark 10-year Treasury bond yields geared up for their fourth consecutive week of gains.

In the realm of other precious metals, spot silver saw a 0.2% rise, reaching $22.72 per ounce. Platinum also experienced a nearly 1% increase, touching $915.06. However, both metals were on track for their fourth consecutive week of losses. Conversely, palladium surged by 0.9% to reach $1,298.30, aiming for its strongest week since mid-June.