After a searing inflation report from the US, the price of the gold fell after investors turned to the dollar as a haven asset.
The US inflation surged last month to a new four-decade high, up 9.1% from a year earlier, despite the fact that the currency has bounced back a downward trend that has seen it slide for four consecutive weeks.
The precious metal was up 0.6% in the previous session, as investors bet that the Fed is more likely to raise interest rates by 100 basis points when it meets July 26 - 27, a move that would boost the chances of the world's largest economy entering a recession.
By Thursday, investors had digested the news and turned away from gold to the dollar as a hedge, according to David Lennox, a resources analyst at Fat Prophets.
Lennox said that we needed to see a much lower US dollar for gold to get a positive kick going forward. The greenback is more valuable than the bullion as a haven asset. This year, gold prices have been volatile as Russia's invasion of Ukraine spurred a rally in the haven to well above $2,000 an ounce in March, only for the momentum to fade as the growth and inflation outlook changed. In the past few weeks, investors have cut holdings in bullion-backed exchange-traded funds.
Spot gold was down 0.4% to $1,728. The Bloomberg Dollar SpotBloomberg Dollar Spot Index gained 0.3%, reversing Thursday's decline. All of the silver, platinum and palladium fell.
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