Gold Slips After Brisk US Inflation Quells Rate-Cut Expectations

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(Bloomberg) — Gold fell after a weekly drop, ahead of a Federal Reserve meeting midweek where policymakers are expected to reaffirm their stance for higher-for-longer interest rates.

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Bullion dropped as much as 0.8% after losing more than 2% last week. The US central bank’s preferred measure of inflation rose at a brisk pace in March, according to data Friday. Swaps traders now see only one Fed reduction this year, well below the roughly six quarter-point cuts seen at the start of the year. Higher rates are typically negative for gold as it doesn’t pay interest.

Gold also lost some support as safe haven demand waned, with US Secretary of State Antony Blinken stepping up efforts to secure a truce in meetings in the Middle East on Monday.

Elsewhere, foreign-exchange markets were in focus amid speculation that Japanese authorities might start buying the yen to support the currency after it fell to the lowest in more that three decades. Should they act, it could weaken the dollar, potentially boosting bullion.

Gold has climbed around 13% this year, hitting a record earlier this month, despite the timeline for Fed cuts being pushed back. The precious metal’s ascent has been linked to central-bank purchases, robust demand from Asian markets especially China, and elevated geopolitical tension from Ukraine to the Middle East.

Spot gold fell 0.4% to $2,329.50 an ounce at 10:05 a.m. in Singapore, after recording its first weekly decline since mid-March. The Bloomberg Dollar Spot Index was up 0.1%, following two weekly gains. Silver was flat, palladium dropped, while platinum edged higher.

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