Gold prices dropped on Friday, staying
on course for a fifth straight weekly decline, as a relentless
surge in the dollar and fears of a more aggressive U.S. interest
rate hike weighed on demand for bullion.
Spot gold was down 0.3% at $1,704.59 per ounce, as of
0702 GMT, and has lost 2.1% so far this week. U.S. gold futures
eased 0.2% to $1,701.70.
“Gold has wilted in the face of a stronger U.S. dollar this
week, but appears to be trying to form a temporary base ahead of
$1,700.00. That said, it is displaying no signs of meaningful
upside momentum with rallies limited to the $1,750.00 region,”
OANDA senior analyst Jeffrey Halley said.
The dollar was perched at 20-year highs, continuing
to suppress demand for greenback-priced gold among overseas
investors, after sending bullion over 2% lower on Thursday.
“In the bigger technical picture, gold still looks
vulnerable, with risks skewed to the downside,” Halley said.
Two of the U.S. Federal Reserve’s most hawkish policymakers
said on Thursday they favored another 75-basis-point interest
rate increase at the central bank’s policy meeting this month,
not the bigger rate hike traders had raced to price in after a
report Wednesday showed inflation was accelerating.
Higher interest rates and bond yields raise the opportunity
cost of holding non-yielding bullion.
Benchmark U.S. 10-year Treasury yields edged lower on
Friday, buoying gold slightly.
“Investment demand for gold is weakening,” ANZ Research said
in a note, adding that gold will remain under pressure from
expectations of a large Fed rate hike.
Spot silver fell 1.1% to $18.18 per ounce, and lost
about 6% this week, in what could be a seventh straight weekly
Platinum slipped 0.4% to $840.53 per ounce. It has
dropped about 6.4% this week, the most in three months.
Palladium rose 0.4% to $1,904.27, but fell 13% this
week, the most since last November.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Amy
Caren Daniel and Sherry Jacob-Phillips)