Gold prices edged lower on Friday as the dollar firmed, although hopes of slower rate hikes from the U.S. Federal Reserve kept bullion on track for its fifth straight weekly gain.
Spot gold fell 0.15% to $1,925.33 per ounce, after rising to its highest since April 22 at $1,937.49 earlier in the session. Prices are up 0.4% this week so far.
U.S. gold futures gained $4.30 to settle at $1,928.20.
“The U.S. dollar is finding some form of stability and in turn we could see gold prices heading lower into next week,” said Daniel Ghali, commodity strategist at TD Securities.
The dollar rose 0.1% against its rivals, making gold more expensive for holders of other currencies.
However, recent weak U.S. economic readings and hawkish remarks from Fed policymakers fueled worries over a global slowdown and prompted investors to seek refuge in the safe-haven metal.
Commentary from Fed officials has pointed to a terminal rate above 5%, but traders still bet on rates peaking at 4.9% by June and see a 93.7% chance for a 25-basis point rate hike in February.
Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion.
While there here has been an accumulation of gold by various central banks and agencies, gold ETFs held by individuals have been decreasing. Were ETF buying to return, that would limit any overbought dip in the metal, said Caesar Bryan, gold portfolio manager at Gabelli Funds.