Gold heads for weekly loss as stronger dollar, Fed rate outlook weighs
GLD•Spot gold rose 0.2% to $4,288.36 an ounce on Friday but was down 2% for the week as a stronger dollar and expectations of higher-for-longer U.S. interest rates weighed on prices.
1. Dollar and rates pressure gold
Gold prices edged higher on Friday but were set for a weekly loss as the dollar gained and U.S. Treasury yields extended their advances. U.S. gold futures rose 0.6% to $4,323.10 an ounce. OANDA senior market analyst Kelvin Wong said a more hawkish outlook from the Federal Reserve would strengthen the dollar and weigh on gold.
2. Fed officials see rate risks
Expectations for higher-for-longer interest rates firmed after two Fed policymakers said additional hikes may be needed to curb high inflation, following last week’s quarter-point increase in the benchmark rate. Philadelphia Fed President Anna Paulson said returning inflation to 2% was a top priority, while New York Fed President John Williams also suggested tighter monetary policy was coming. Higher rates can reduce gold’s appeal by increasing the attraction of yield-bearing assets. Silver fell 0.1% to $63.81 an ounce, platinum gained 0.5% to $1,756.90 and palladium dropped 1.3% to $1,257.56; all three were poised for weekly losses.
