Bullion ends the week above $US4000/oz barrier amid growing price pressure sparked by Iran war restart

Gold trimmed its weekly loss as some investors bought on dips after the precious metal broke below a key price level, even as escalating war tensions kept interest rate hike bets alive. Bullion advanced as much as 1.2 per cent on Friday to finish at $US4017 an ounce — above the key psychological level of $US4,000/oz ounce, after earlier swinging between gains and losses. But it still ended the week down more than 2 per cent as continuous clashes between US and Iran saw investor money pour back into oil bets. Meanwhile, US consumer sentiment rose in early July to a five-month high as lower petrol prices boosted morale, with consumers expecting prices to rise at an annual rate of 4.2 per cent over the next year, down from 4.6 per cent in June. The Iran conflict, now in its fifth month, is again driving up energy and commodity prices from fuel to raw materials used in manufacturing and food production. That is kindling fears the US Federal Reserve may eventually tighten monetary policy, even as soft US economic data suggest a rate hike is not likely in the near term. Higher borrowing costs are a headwind for non-yielding bullion. There was “some dip buying on breaks of $US4000 per ounce,” TD Securities senior commodity strategist Ryan McKay said. “It should be expected that there is some softening in the inflation numbers as energy prices tanked in June, but more recent escalations will be keeping a lid on things and keeping Fed hike odds alive.” Swap traders see just a 12 per cent likelihood that the Federal Reserve will raise interest rate at its next meeting in July, but have priced in at least one hike by the end of the year. Meanwhile, a growing chorus of Federal Reserve officials are expressing concern over high inflation and warning that the central bank might soon need to lift rates. Bullion has hovered in a narrow range around $US4000/oz in recent weeks after losing 14 per cent in the second quarter, its worst showing since 2013. An ounce of gold peaked at $US5600 in January this year. Last month, it notched its worst monthly performance since the 2008 financial crisis.