(Bloomberg) — Gold edged up ahead of US inflation data due Friday, but was still headed for a weekly loss.
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Traders are awaiting the release of the personal consumption expenditures index, which is expected to show price pressures remained elevated in March. On Thursday, another key measure of inflation jumped, casting doubt on the Federal Reserve’s ability to start lowering borrowing costs soon and sending Treasury yields higher.
Higher rates and yields are typically negative for gold, as it doesn’t pay interest.
Still, Thursday’s inflation print coincided with a report on US gross domestic product that trailed forecasts, rekindling the prospect of stagflation — an economic cycle characterized by slow growth and high unemployment, accompanied by inflation.
That could add support to gold, which is among assets that benefit from haven flows.
Attention has turned “towards the risk of sticky inflation,” said Ole Hansen, a commodity strategist at Saxo Bank A/S. “Recent behavior shows investors are increasingly concerned about a potential debt crisis as US Treasury yields continue to rise.”
Fed Bank of Chicago President Austan Goolsbee said in an interview published by the Wall Street Journal Thursday that the US central bank had to “recalibrate” after a string of higher-than-hoped inflation prints.
Spot gold, which climbed to a record two weeks ago, traded up 0.7% at $2,348.95 an ounce as of 11:20 a.m. in London. That pares its decline this week to 1.8%. The Bloomberg Dollar Spot Index was flat. Silver edged higher, while platinum and palladium slipped.
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