Gold set for weekly dip on prospects of more rate hikes

June 16 (Reuters) – Gold prices eased on Friday and were headed for a slight weekly fall as traders weighed recent US economic data and hawkish signals from the Federal Reserve on further monetary tightening.

Spot gold fell 0.2% to USD 1,954.83 per ounce by 0450 GMT. US gold futures edged 0.2% lower to USD 1,967.30.

Bullion tumbled to a three-month low on Thursday before reversing course to finish higher after US economic data offered some respite from the Fed’s “hawkish pause” on rate hikes.

“Gold is struggling to move higher because the Fed’s message on inflation and interest rates still remains hawkish. So, it’s sort of removing the incentive to buy gold because there are more interest rate increases on the horizon,” said Edward Meir, a metals analyst at Marex.

While gold is considered a safe haven during economic uncertainties, higher interest rates dull the appeal for zero-yield bullion.

Traders are now pricing in a 72% chance of a 25-basis point rate hike in July after the Fed signaled in new projections that borrowing costs might still need to rise by as much as half a percentage point by year-end.

The dollar index held close to a one-month low, limiting losses in gold.

In the next two weeks, gold could trade in the USD 1,931- USD 2,000 range, with stiff resistance seen at the upper end, Meir added.

The Bank of Japan, meanwhile, maintained its ultra-easy monetary policy despite stronger-than-expected inflation, as it focused on supporting a fragile economic recovery amid a sharp slowdown in global growth.

Spot silver was flat at USD 23.8451 per ounce, platinum too was little changed at USD 985.55 per ounce. But both metals were headed for a weekly loss.

Palladium steadied at USD 1,397.90 and was set for its best week since April.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Rashmi Aich, Subhranshu Sahu and Sohini Goswami)