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Gold down 1% this week so far
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U.S. Jan PCE data due at 1330 GMT
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Fed rates seen peaking at 5.338% in July
(Adds comments and details, updates prices)
By Kavya Guduru
Feb 24 (Reuters) - Gold prices inched lower on Friday as
investors fretted that a recent slate of stronger-than-expected
economic data from the United States could make the Federal
Reserve keep raising interest rates for longer.
Spot gold was down 0.1% at $1,821.80 per ounce, as of 0745 GMT. U.S. gold futures rose 0.2% to $1,831.00. Bullion is likely to decline for a fourth straight week and is down about 1% for the period. "There's been a meaningful hawkish shift in the way that markets perceive this whole string of economic data releases... enough for markets to conclude that the Fed might be looking at higher-for-longer interest rates," said Ilya Spivak, head of global macro at Tastylive. "That has weighed very heavily on gold."
Bullion is seen as a hedge against inflation, but rising interest rates dull its appeal as they increase the opportunity cost of holding the non-yielding asset vis-a-vis bonds.
Data on Thursday showed U.S. GDP increased at a revised 2.7% annualized rate last quarter, while new claims for unemployment benefits unexpectedly fell last week. Separately, data showed fourth-quarter personal consumption expenditures (PCE) price index rose 3.7%, revised up from a previous estimate of 3.2%.
Thursday's reports are the latest in a flurry of data that have fuelled concerns that interest rates would stay higher for longer. Traders of Fed funds futures expect benchmark rates to peak at 5.338% in July and remain above 5% through the year. The Fed's preferred inflation measure, the PCE data for January, is due at 1330 GMT and will be closely watched. "It may take a significant outperformance (in core PCE numbers) to sway market expectations further," said Yeap Jun Rong, a market analyst at IG.
"A lower-than-expected read could see some paring back of hawkish bets, which could prompt renewed upside in gold." The dollar index steadied, making bullion more expensive for overseas buyers. Spot silver lost 0.5% at $21.19 per ounce, platinum fell 0.3% to $944.32 and palladium shed 0.8% to$1,438.19 per ounce. (Reporting by Kavya Guduru in Bengaluru; Editing by Uttaresh.V, Vinay Dwivedi and Nivedita Bhattacharjee)
