Gold faces fifth weekly loss on dollar surge, rate-hike fears

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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

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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

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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

loss.

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)