Gold heads for fourth weekly drop as traders reassess Fed rate outlook

Gold prices rose on Friday as recent U.S. inflation data weighed on the dollar and led markets to slightly trim rate-hike bets, though the metal was on track for a fourth straight weekly fall, having slipped to a more than seven-month low earlier this week. Spot gold was up 0.7% at $4,051.97 an ounce as of 1128 GMT. U.S. gold futures for August delivery rose 0.5% to $4,067.50/oz. Bullion slipped below the $4,000-mark on Wednesday for the first time since November, as the dollar climbed to its strongest level in over a year on the same day. The yellow metal is set for a weekly loss of about 2.5%. Gold is trading near $4,000 for a third consecutive session, with investor sentiment still shaken by the recent selloff as markets adjust to the twin headwinds of a hawkish Fed and a stronger dollar, Saxo Bank analyst Ole Hansen said. The U.S. dollar held near recent highs despite a modest dip after the release of the Fed's preferred inflation gauge on Thursday led markets to slightly scale back Fed rate-hike expectations. Markets still expect three Federal Reserve rate hikes this year, with CME FedWatch showing a roughly 61% chance of a September increase, down from 69% before the U.S. personal consumption expenditures data. "While the technical breakdown continues to weigh on sentiment, continued declines in energy prices and softer bond yields may eventually reduce pressure on the Federal Reserve to tighten policy further, potentially offering some support to the precious metal," added Hansen. Crude prices have fallen more than 2% as supply concerns ease following the exit of more stranded oil tankers through the Strait of Hormuz. A sustained break below $4,000 could see bears test $3,886 support, while a bearish "death cross" may reinforce downside momentum, leaving prices vulnerable to the $3,600 to $3,700 range in the months ahead, said Han Tan, chief market analyst at Bybit. Among other metals, spot silver rose 0.8% to $58.33 per ounce, platinum gained 1.3% to $1,622.30, and palladium rose 2.5% to $1,213.76. All metals were headed for a weekly loss.