(Bloomberg) -- Gold headed for a fourth weekly gain -- the longest winning streak in almost a year -- as cooling inflation in the US suggested rate hikes might not be as aggressive as anticipated.
Bullion edged lower for a third day on Friday, but is still up almost 1% this week. American producer prices unexpectedly fell for the first time in more than two years in July, while consumer prices also decelerated last month. The data supported the case for the Federal Reserve to be less hawkish, but resulted in gold consolidating just below $1,800 an ounce rather than pushing higher.
Swaps referencing the central bank’s September meeting point to a 50 basis-point hike, down from a 75 basis-point projection before the inflation data. San Francisco Fed President Mary Daly said while the fight against rapid price growth is far from over, a half-point hike in September is still her base case, although she’s open to an increase of three quarters of a percentage point.
The precious metal has now rebounded more than 5% from a low in mid-July on a combination of fears of a global recession and heightened US-China tensions over Taiwan. It’s also been aided by declines in the dollar in recent weeks.
Gold has struggled to keep up its recent bullish momentum, despite inflation data supporting the view that the Fed’s rate hikes are likely to slow, said Fawad Razaqzada, a market analyst at StoneX. Some consolidation may be needed for the metal to gear up for a clean breakout above $1,800 an ounce, he said.
Spot gold slipped 0.1% to $1,787.77 an ounce as of 10:02 a.m. in Singapore, and is up 0.7% this week. The Bloomberg Dollar Spot Index added 0.1%. Palladium and platinum edged lower, while silver was steady.