Gold pared gains on Friday, heading for a second weekly drop, after data showing U.S. consumer prices rose in March tempered speculation the Federal Reserve will delay its first interest rate rise in nearly a decade.
The metal held above the $1,200 an ounce level, however, which it broke above earlier this week after a run of downbeat U.S. data led analysts to reassess expectations the Fed would raise rates in June.
Spot gold was up 0.4 percent at $1,201.31 an ounce at 1339 GMT, off an earlier high of $1,207.60 and down 0.5 percent on the week. U.S. gold futures for June delivery were up $3.50 an ounce at $1,201.50.
Gold is sensitive to U.S. monetary policy, as rising rates would boost the dollar, in which the metal is priced, while lifting the opportunity cost of holding non-yielding bullion.
“Even if the rate rise gets pushed back, people still see rates rising, and we believe that’s still a negative for gold,” Julius Baer commodity analyst Warren Kreyzig said. “Maybe there’s less sensitivity around the timing than there is about the actual direction (of rates).”
“The delay may give gold a reprieve, but in the long term we think it will still go down.”
The dollar pared early losses against a basket of currencies to turn positive after the U.S. inflation data.
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