London - Gold headed for the biggest weekly drop in more than a month as investors waited on economic data next week for guidance on when the Federal Reserve will raise interest rates.
Bullion added 0.2 percent in London on Friday after falling the previous four days. Prices retreated from the highest in almost seven weeks on Monday, when a rout in global markets boosted demand for a haven and cast doubt on whether US policy makers would increase borrowing costs in September. US jobs and manufacturing reports are due next week.
Data released Thursday showed the US economy grew more than previously estimated in the second quarter. Traders are pricing in a 30 percent chance the Fed will raise rates next month, up from 24 percent two days ago. Market turmoil has pushed the Fed’s plan for a rate increase to December, according to Mohamed El-Erian, a Bloomberg View columnist and chief economic adviser at Allianz.
“Gold’s sensitivity to data could become more heightened as September’s meeting comes nearer,” Joni Teves, a precious metals analyst at UBS Group in London, said by phone Friday. “If the picture is convincing enough for people to shift their expectations on the Fed, that will have a big impact on gold.”
Gold for immediate delivery traded at $1 127.67 an ounce by 11:51 a.m. in London, according to Bloomberg generic pricing. Prices are down 2.9 percent this week. Futures for December delivery rose 0.4 percent to $1 126.70 on the Comex in New York.
Investors bought 1.8 metric tons through gold-backed funds as of Thursday, data compiled by Bloomberg show. Holdings are at 1 529.4 tons, the highest since July 30.
Silver for immediate delivery fell 0.5 percent to $14.427 an ounce in London, heading for a 5.8 percent drop this week, the most since February. Palladium climbed 1.6 percent to $571.60 an ounce, still set for a 5.2 percent weekly decline. Platinum added 0.3 percent to $1,003 an ounce.
BLOOMBERG