Gold poised for weekly fall as Fed hints at more rate hikes

Gold prices were on track for a second consecutive week of declines, weighed by a stronger US dollar and Treasury yields after hawkish remarks from Federal Reserve chair Jerome Powell.

Spot gold was little changed at $1,959.74/oz by 3.51am GMT on Friday, after hitting its lowest since October 18 on Thursday. US gold futures fell 0.3% to $1,964.50.

Gold was also set for its worst week in more than a month, down 1.6% so far this week.

Denting market expectations of a peak in US rates, Fed officials including Powell said on Thursday they are still not sure that interest rates are high enough to finish the battle with inflation.

“Gold has been consolidating below $2,000 since the beginning of November, after getting ahead of itself… However, I remain bullish for year-end as long as it stays above $1,900,” said Hugo Pascal, a precious metals trader at InProved.

After Powell’s comments, benchmark 10-year US Treasury yield rose from more than one-month lows, making non-yielding bullion less attractive for investors.

Traders pushed out bets on the Fed’s likely first interest rate cut to June next year from May earlier. Higher rates raise the opportunity cost of holding gold, which yields no interest.

Meanwhile, the dollar index was heading for its best week in two months, making gold more expensive for other currency holders.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits edged down last week.

Palladium slipped 1.3% to $979.43/oz to its lowest levels since 2018 and was set for its worst week in 11 months.

Platinum, meanwhile, eased 0.2% to $857.61 and was heading for its worst weekly performance since the week ended June 18 2021. Silver rose 0.4% to $22.72.

Reuters