Gold heads for narrow weekly gain as traders weigh US data

The metal’s recovery comes amid uncertainty over recession risks as the Fed tightens policy to fight inflation

Gold headed for a narrow weekly gain, with traders weighing mixed US data and comments from Federal Reserve officials pushing for more rate hikes before a key speech by Chair Jerome Powell later Friday.

Bullion eased back slightly on Friday, having climbed over the prior three days. The metal’s recovery comes amid uncertainty over recession risks as the Fed tightens policy to fight inflation. The government’s main measures of US growth pointed in different directions in the first half, adding to the debate on the outlook.

Gold has lost about 4% this year as the initial shock of the war in Ukraine faded and the Fed raised rates, dulling the allure of the non-interest bearing metal. Powell - who is scheduled to deliver the keynote address at the annual Jackson Hole symposium - is likely to restate his resolve to keep on tightening as US price pressures remain elevated.

Ahead of his remarks, St. Louis Fed chief James Bullard said officials should act quickly and lift the policy benchmark to 3.75% to 4%.

Separately, Kansas City Fed President Esther George said the Fed hasn’t yet raised borrowing costs to levels that weigh on the economy and may have to take them above 4%.

We still expect the Fed to take the upper bound of the Fed funds rate to 4% by early 2023, Georgette Boele, senior gold strategist at ABN-Amro Bank NV, said in a note that also flagged expectations for a relatively strong dollar. However, we only expect a modest decline in gold prices, she said, with the bank’s new year-end forecast at $1,700 an ounce, down from $2,000.

Spot gold slipped 0.2% to $1,755.78 an ounce as of 6:10 a.m. in London, paring the weekly gain to 0.5%.