Gold prices extended losses on Friday, sliding to four-week lows as traders awaited the latest United States inflation data for fresh policy cues and weighed renewed speculation around the Federal Reserve’s direction.
By 3:30 pm AEST (5:30 am GMT), spot gold had dropped $29.78, or 0.9%, to US$3,298.52 per ounce, consolidating its weekly decline below the $3,330 mark.
The move came as the U.S. dollar rebounded slightly from multi-year lows, lifted by renewed optimism around trade negotiations and expectations that the Federal Reserve may maintain a hawkish stance in the near term.
Gold, which often moves inversely to the dollar, hovered near a key daily support line, as traders avoided taking strong positions ahead of Friday’s release of the core personal consumption expenditures (PCE) price index - the Fed’s preferred inflation gauge.
Markets expect annual core PCE inflation to rise 2.6% in May, up from April’s 2.5%, with a 0.1% month-on-month increase anticipated, matching the previous month’s pace.
Stronger-than-expected inflation could revive bets that the Fed might delay interest rate cuts, though some analysts believe it may still move as early as July.
According to the CME FedWatch Tool, markets are pricing in a 20.7% chance of a rate cut in July, with the odds rising to 72.2% by September.
Investor attention has also been drawn to speculation around the Fed's leadership. A Wall Street Journal report suggested President Trump may announce a successor to Chair Jerome Powell by September or October, potentially replacing him with a more dovish figure.
However, a Reuters source familiar with White House discussions said, “Trump has not decided on a replacement for Powell and a decision is not imminent.”
