Gold set for second weekly drop on higher-for-longer rate jitters

Gold prices were on track for their second straight weekly decline on Friday as U.S. inflation readings for August reinforced market bets for further rate hikes by the Federal Reserve after a likely rate pause next week.

FUNDAMENTALS

Spot gold was steady at $1,910.85 per ounce by 0100 GMT. Bullion was on track for a weekly decline of 0.4% after having touched its lowest level since Aug. 23 on Thursday. U.S. gold futures were down 0.1% at $1,932.60.

U.S. producer prices increased by the most in more than a year in August while retail sales also beat expectations, boosted by a surge in gasoline prices. This comes after U.S. consumer prices increased by the most in 14 months last month. The European Central Bank raised its key interest rate to a record high of 4% on Thursday, but signalled that the hike was likely to be its last.

SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.3% on Thursday. The London Bullion Market Association called for proposals from service firms to create a secure global database that would improve trust in the gold market’s value chain. Global demand for silver will decline by 9.4% this year largely due to a drop in investment, but the market will maintain a deficit, according to a report from Chilean state agency Cochilco.

Spot silver rose 0.2% to $22.67 per ounce. Platinum gained 0.1% at $907.19 and palladium fell 0.6% to $1,244.12, both looking poised for weekly gains. DATA/EVENTS (GMT) 0200 China Economic data Aug 0430 Japan Tertiary Ind Act NSA July 0645 France CPI (EU Norm) Final MM YY Aug 0900 Euro Zone Total Trade Balance SA July 1000 Euro Zone Total Reserve Assets Aug 1230 US Import Prices YY Aug 1315 US Industrial Production MM Aug 1400 US U Michigan Sentiment Prelim Sept

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