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Commodity Market: Gold heads for weekly loss as US Dollar firms with Fed rate trajectory in focus

Spot Gold retreated on Friday on firmer US Dollar after some soft US data added to expectations that the Federal Reserve would probably put policy tightening on hold after hiking interest rates one more time in May.

According to Ilya Spivak, head of global macro at Tastylive, the yellow metal has been moderating amid a lack of real incoming news flow and “we really need to see some bigger pieces of information to give it that directional conviction.”

The latest US data string revealed a higher number of Americans filing claims for unemployment assistance last week, while factory activity in the mid-Atlantic area was the lowest in almost three years in April.

The Manufacturing and Services PMI data, scheduled to be released later on Friday, will be “an interesting window into what’s going on, then another big break until we see the U.S. GDP and PCE numbers next week,” according to Tastylive’s Spivak.

Yesterday Fed President for Cleveland Loretta Mester said the US central bank still had more policy tightening to do, but yet, the aggressive rate hiking move over the past year was approaching its end.

Futures markets are now pricing in an 82.6% chance of the Federal Reserve raising interest rates by another 25 basis points at the upcoming policy meeting in May. The US Dollar was poised to register its first weekly advance since early March, making Gold less attractive for international investors.

As of 9:23 GMT on Friday Spot Gold was losing 0.86% to trade at $1,987.40 per troy ounce. Earlier this week, the precious metal went down as low as $1,969.30 per troy ounce, which has been its weakest price level since April 3rd ($1,949.81 per troy ounce).

The commodity was on course for a weekly loss, being down 0.90% so far this week.

Gold Futures for delivery in June were retreating 1.09% on the day to trade at $1,997.15 per troy ounce, while Silver Futures for delivery in May were down 0.88% to trade at $25.150 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.12% to 101.918 on Friday. Earlier this week, the DXY went up as high as 102.231, which has been its strongest level since April 11th (102.519).

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