Gold bound for weekly dip on bets for higher-for-longer rates

By Seher Dareen

(Reuters) – Gold was little changed on Friday, but bullion was bound for its third straight weekly dip as recent sound U.S. economic data raised bets for interest rates staying higher for longer.

Spot gold was steady at $1,887.79 per ounce by 2:22 p.m. ET (1822 GMT), down 1.4% for the week so far. U.S. gold futures settled 0.1% higher at $1,916.5

Limiting losses for the day, the dollar was down 0.2%, making gold cheaper for holders of other currencies. [USD/]

“Gold’s got a problem where it’s competing with instruments that are yielding 4-5%”, such as bonds, while gold yields nothing in comparison, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago. [US/]

“It just does not seem like an ideal asset class in the current environment.”

“Gold may continue to struggle attracting demand from investors until something breaks, either through a credit event, a weaker dollar, or the belief the FOMC has switched its focus towards cutting rates,” said Saxo Bank’s head of commodity strategy Ole Hansen in a note.

Traders expect the Fed to hold rates in the 5.25%-5.5% range until 2024, according to the CME’s Fedwatch tool, while awaiting guidance from the Jackson Hole summit next week.

Premiums on physical gold in China jumped to the highest level since December 2016 this week as economic worries spurred fresh safe-haven demand. [GOL/AS]

“We still expect disinflation and a lift in unemployment to bring about policy easing that will be gold-supportive,” said strategists at Macquarie, adding there was significant support around $1,840/oz.

Spot silver rose 0.1% to $22.70 per ounce.

The strength in investment by utilities, especially in solar energy, was supporting demand in silver.

Platinum rose 2.1% to $908.38 per ounce, while palladium jumped 2.8% to $1,251.61, though both were set for weekly declines.

(Reporting by Seher Dareen in Bengaluru; Editing by Mark Potter, Shilpi Majumdar and Sandra Maler)