Gold prices slid on Friday as the dollar rose, on course to a weekly loss, while investors remained focussed on whether the U.S. Federal Reserve would pause its tightening cycle after delivering one more rate hike next month.
Spot gold was down 1% at $1,984.89 per ounce, as of 0725 GMT, after rising 1% on Thursday. Bullion has lost about 0.9% so far this week, its biggest weekly decline since late February.
U.S. gold futures shed 1.2% to $1,995.60.
Gold prices have been moderating in the absence of real incoming news flow and “we really need to see some bigger pieces of information to give it that directional conviction”, said Ilya Spivak, head of global macro at Tastylive.
Data on Thursday showed more Americans filing claims for unemployment benefits. Separate data showed factory activity in the mid-Atlantic region plunging to a nearly three-year low in April.
Cleveland Fed President Loretta Mester on Thursday said the Fed still has more rate increases ahead of it, but noted the aggressive move to boost the borrowing cost over the last year is nearing its end.
Rate hikes raise the opportunity cost of holding non-interest-bearing gold.
The CME FedWatch tool shows markets are pricing in an 82.6% chance of a 25 basis points hike in May, which set the dollar for its first weekly gain in over a month and made bullion expensive for overseas buyers.
Data showed British retail sales fell by a greater-than-expected 0.9% in March from February. The Bank of England is expected to raise rates for the 12th consecutive meeting in May.
The Purchasing Managers’ Index data due later in the day will be “an interesting window into what’s going on, then another big break until we see the U.S. GDP and PCE numbers next week,” Spivak said.
Spot silver dropped 1.2% to $24.98 per ounce, and was headed for its first weekly decline in six.
