Gold prices rise on some Fed clarity, set to snap 4-week losing spree

By Ambar Warrick

Investing.com -- Gold prices advanced on Friday, and were set for their first weekly gain in five as recent comments from Federal Reserve officials helped provide more clarity on the path of monetary policy this year.

Atlanta Fed President Raphael Bostic reiterated the case for a 25 basis point hike in March, while Fed Governor Christopher Waller said in a separate speech that moderating inflation and economic growth could call for rates peaking at an earlier forecast of 5.4%.

But they both warned that any signs of an overheated economy could invite more hawkish moves by the central bank. Still, metal markets took their comments in stride, extending earlier gains seen this week.

Spot gold rose 0.2% to $1,838.42 an ounce, while gold futures rose 0.2% to $1,844.25 an ounce by 19:40 ET (00:40 GMT). Both instruments were set to add about 1.5% this week, their first positive week since mid-January.

But the yellow metal was still nursing sharp losses in February, following signs of stubborn U.S. inflation and a strong labor market. Treasury yields also rose overnight, while the dollar firmed as data showed U.S. jobless claims fell further in the past week.

Focus on Friday is on a reading on U.S. service sector activity, with any signs of economic resilience giving the Fed more room to raise interest rates.

Rising U.S. interest rates bode poorly for metal markets, given that they drive up the opportunity cost of holding non-yielding assets. Gold and its peers had logged steep losses through 2022 as the Fed began aggressively raising interest rates.

But the prospect of an eventual pause in rate hikes helped metal markets recover from recent losses this week. Platinum futures were set for a nearly 7% weekly gain, snapping a seven-week losing streak, while silver futures were set to rise 1.2% after six straight weeks of losses.

Industrial metals also advanced this week, as stronger-than-expected Chinese business activity data spurred bets on a recovery in the world’s largest commodity importer.

Copper futures rose 0.2% to $4.0800 a pound, and were set to add more than 3% this week.

But the red metal logged steep losses on Thursday amid growing fears of a U.S. recession this year, which could significantly dent industrial activity. Data also showed this week that U.S. manufacturing activity has consistently declined over the past few months.