Gold set for third weekly gain as Iran ceasefire optimism tempers US rate outlook

Gold prices edged lower on Friday as the dollar firmed, but the metal remained on course for a third consecutive weekly gain as renewed U.S.-Iran ceasefire optimism softened inflation fears and expectations for higher U.S. interest rates.

FUNDAMENTALS

* Spot gold was down 0.2% at $4,755.84 per ounce by 0055 GMT. The metal, however, has gained 1.8% so far this week.


* U.S. gold futures for June delivery fell 0.8% to $4,779.20. * Spot ‌gold has fallen ⁠about ⁠10% since the U.S.-Israel conflict with Iran erupted on February 28, highlighting sharp swings in investor sentiment during the ongoing crisis.

* The dollar index strengthened, making greenback-priced bullion more expensive for other currency holders.

* U.S. President Donald Trump announced a ceasefire in the six-week-old Iran conflict late on Tuesday, reducing fears of prolonged disruption and easing inflation concerns. This has led investors to scale back expectations for further rate hikes, offering support to gold.

* However, risks remain. Israeli Prime Minister ⁠Benjamin Netanyahu said ‌on Thursday he is seeking direct talks with Beirut, a day after heavy bombardment in Lebanon killed more than 300 people in Lebanon and briefly placed ⁠the U.S.-Iran ceasefire in jeopardy.

* While a stronger dollar pressured prices in the short term, easing geopolitical tensions and a more stable U.S. rate outlook kept bullion on track for weekly gains.

* Brent crude oil prices fell more than 11% so far this week, easing inflation concerns on optimism that the ceasefire would result in a reopening of the Strait of Hormuz, the narrow waterway that typically handles about one-fifth of global oil trade.

* On the data front, the U.S. Personal Consumption Expenditures index, the ‌Federal Reserve's preferred inflation gauge, advanced 2.8% in the 12 months through February, in line with estimates, and likely rose further in March.

* Investors now await March's U.S. Consumer Price Index data, due ⁠later in the day. * Markets are pricing in a 31% chance for a U.S. rate cut of at least 25 basis points at the Fed's December meeting, according to CME's FedWatch Tool, up from the 21% in the prior session.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14% to 1,057.96 tonnes on Wednesday.

* Among other metals, spot silver rose 0.1% to $75.11 per ounce, platinum lost 1.2% to $2,077.67, and palladium fell 1.1% to $1,540.03.

DATA/EVENTS (GMT)

1230 US Core CPI MM, SA March

1230 US Core CPI YY, NSA March

1230 US CPI MM, SA March

1230 US CPI YY, NSA March

1230 US CPI Wage Earner March

1400 US Factory Orders MM February

1400 US U Mich Sentiment Prelim April