Gold gave up some of its gains on Friday to post its third straight weekly loss.given the probability of a last minute agreement on the debt ceiling and bets on higher interest rates for a longer time after higher than expected inflation data in the United States.
Spot gold rose 0.1% to $1,941.82 an ounce, after rising as much as 0.9% in the session. US gold futures were down 0.1% at $1,942.10. The bullion hit a two-month low of $1,936.59 during Asian trade, plunging 1.8% for the week, the worst since early February.
The White House and congressional Republicans are trying to put the finishing touches on a deal to raise the debt ceiling for two years.
Short-term traders are selling as inflation data points to a possible rate hike in June, said Tai Wong, a New York-based independent trader. “Despite the positive noise coming from Washington, it may still be difficult to reach a debt deal before June 1,” he said.
The personal consumption expenditures (PCE) price index, which the Federal Reserve is tracking to hit its 2% inflation target, rose 4.4% in the 12 months to April, after advancing 4.2%. in March.
Traders increased bets that the Fed would not finish raising rates, which would reduce the attractiveness of gold, which does not earn interest.
The 10-year Treasury yield and the dollar index were near their highest levels since mid-March.and both are heading for their third consecutive weekly gains.
In other precious metals, spot silver gained 1.6% to $23.13 an ounce, though it also posted its third consecutive weekly decline; platinum advanced 0.3% to u$s1,023.93; and palladium improved 0.5% to $1,424.28.
Is it time to buy?
Gold tends to appreciate against lower interest rate expectationssince you are they reduce the opportunity cost of holding bullion, which does not earn interest.
Gold is considered a safe haven asset. Its ability to preserve wealth and its greater security as an investment, compared to the volatility of paper-denominated currenciesearned him that name.
In general terms, one of the best times to invest it is when the asset trades at a cheaper price.
What is the use of buying gold? As gold is used as a safe haven asset, Yeah there is a fall in the dollar or there is a forecast that a global crisis will break outgold will always be an advisable investment.
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