Core Strategic Partners: Gold drifted lower on Friday for the third consecutive session and registered its largest weekly slide in nearly two months on increased expectations for an increase in US interest rates as soon as June.
Gold for immediate delivery was down 0.2% at $1,252.1 an ounce, down 1.6% on the week in its third unbroken week of losses. US gold futures for June delivery ended down $1.90 at $1,252.90.
Comments by, among others, New York Fed President William Dudley revealed that there was a strong sense among central bank officials that markets had been significantly discounting the probability of monetary policy tightening.
Dudley believed the markets had been too dismissive of the Fed’s ability to raise interest rates and the recently published minutes of the Fed's April meeting suggested that most policymakers felt a rate increase might be appropriate as early as next month.
The revelations sent gold to a three-week nadir of $1,244 and while it has since bounced back, but Will Masson, chief markets strategist at Core Strategic Partners, said he believed gold would continue to come under pressure until at least the first week in June.
"We believe that another miss on the nonfarm payrolls data will prove highly supportive for gold prices because we don’t think the Fed will want to be seen raising interest rates when the most visible and emotive economic data of all is potentially beginning a downtrend," he explained.
Core Strategic Partners’ strategists say that they remain bullish on gold despite the recent pullback and expect the Fed to hold rates at its June meeting.

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