Gold on track for major weekly drop as dollar strengthens

WASHINGTON: Gold edged lower on Friday and was set to post its biggest weekly drop in over three months on a stronger dollar, while investors awaited key US inflation data for cues into the Federal Reserve’s monetary policy trajectory.

Spot gold was down 0.1 per cent at $2,874.69 an ounce as of 0232 GMT.

Bullion is down 2 per cent so far for the week, its biggest weekly drop since November 2024, and on track for its first weekly decline after eight consecutive gains.

US gold futures eased 0.3 per cent to $2,886.80.

The dollar index (.DXY) was set for a weekly gain of 0.7 per cent so far, making greenback-priced gold more expensive for foreign buyers.

“While gold is deemed a safe haven, the uncertainty on the trade front may still see profit-taking activities extend further amid a stronger US dollar,” said IG market strategist Yeap Jun Rong.

US President Donald Trump said on Thursday his proposed 25 per cent tariffs on Mexican and Canadian goods will take effect March 4 along with an extra 10 per cent duty on Chinese imports because deadly drugs are still pouring into the US from those countries.

Philadelphia Federal Reserve Bank President Patrick Harker expressed support for continuing to hold short-term borrowing costs in the current range of 4.25 per cent-4.50.

Gold is seen as a hedge against political risks and inflation, but higher interest rates dampen the non-yielding asset’s appeal.

Investors now await the Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation measure, due at 1330 GMT.

“I do not think rate pricing will see any significant shift, with several components in the CPI and PPI suggesting that the PCE inflation could remain under control and hence, may not sway rate expectations as much,” Yeap said.

Spot silver rose 0.4 per cent to $31.37 an ounce, platinum firmed 0.3 per cent to $951.95, and palladium gained 0.1 per cent to $920.34.

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