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Gold to suffer third weekly loss due to stronger dollar and reduced Fed rate cuts

Gold prices were stable on Friday but are on track for a third successive weekly loss, due to a stronger dollar, and lowered expectations of U.S. interest rate cuts. Meanwhile, uncertainty over U.S. tariffs against trading partners provided support.

As of 0733 GMT, spot gold was unchanged at $3,288.89 an ounce. Bullion has fallen 1.4% this week.

U.S. Gold Futures declined 0.3% to $3339.90.

Gold is now more expensive to other currency holders due to the dollar index reaching its highest level since 29 May.

Gold remains weighed down by lower bets on Fed rate cuts through 2025. The U.S. weekly jobless claims and PCE data this week also reinforced the Fed's unwillingness to commit to a cut in rates," said Han Tan.

Fed kept rates at 4.25% to 4.50% on Wednesday, dampening expectations of a rate cut in September.

U.S. president Donald Trump slapped tariffs on exports of dozens of trading partner countries, including Canada. Brazil, India, and Taiwan. He is pressing forward with his plans to reorder global economy before a Friday deadline for trade deals.

Tan stated that "the precious metals should be supported despite the uncertainty of the impact of U.S. Tariffs on global growth."

Inflation in the United States increased in June, as tariffs on imported goods began to increase the price of certain goods.

Investors will now be assessing the Federal Reserve’s policy direction as they await the U.S. employment data due on Friday. July job growth is expected to have slowed, and the unemployment rate is projected to increase to 4.2%.

In an environment of low interest rates, gold, which is often viewed as a safe haven during times of economic uncertainty, performs well.

The physical gold demand on key Asian markets has improved this week, as the price drop has sparked a renewed interest in buying. However, volatility is keeping some buyers cautious.

Silver spot fell by 0.7%, to $36.50 an ounce. Platinum dropped 0.8% to $1,278.40, and palladium was off 0.2% at $1188.28. All three metals are headed to weekly losses. (Reporting and editing by Harikrishnan Nair in Bengaluru, Anmol Choubey)

(source: Reuters)