Gold up, but headed for worst month since September on US rate hike bets

Gold rose on Friday as worrying US economic data rekindled some interest in the safe-haven metal, but was likely to log its biggest monthly drop since September on bets for aggressive interest rate hikes by the Federal Reserve.

Spot gold was up 0.3 per cent at $1,899.00 per ounce, as of 0247 GMT, but had lost about 2 per cent so far this month. US gold futures were up 0.6 per cent at $1,902.10.

The disappointing US GDP number could take some pressure off the Fed to tighten quite as aggressively as it has hinted, a rhetoric that has pressured gold in recent weeks, said Ilya Spivak, a currency strategist at DailyFX. "That has given gold a bit of a lifeline, and knocked the dollar back just a bit. I don't expect these moves to continue though," Spivak added.

Fed officials have aligned around plans to accelerate the pace of interest rate hikes this year but remain split over what could be the make-or-break decision of where to stop to avoid dragging the economy into recession. Higher short-term US interest rates and bond yields increase the opportunity cost of holding zero-yield bullion.

Gold prices were headed for their biggest monthly percentage drop since September 2021, as the dollar and US 10-year Treasury yields have strengthened this month. A stronger dollar makes greenback-priced gold less attractive for other currency holders. The dollar steadied off a 20-year high it reached against rivals in the previous session.

"The freight train, otherwise known as the US dollar, will have to slow down at some point. And that could bode well for gold when it does," trading firm City Index's senior market analyst Matt Simpson said in a note. Spot silver gained 0.1 per cent to $23.16 per ounce, platinum dipped 0.5 per cent to $915.19, and palladium rose 0.5 per cent to $2,243.74. All were set for monthly falls.

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