Gold prices languished on Friday near
the lowest level in more than two years, and were set for their
worst week in two months, as prospects of aggressive rate hikes
by the U.S. Federal Reserve lifted bond yields and took the
shine off bullion.
Spot gold fell 0.1% to $1,661.97 per ounce, as of
0724 GMT, after hitting its lowest since April 2020 at
$1,658.30. Prices were down 3.2% for the week so far.
U.S. gold futures fell 0.4% to $1,670.50.
“Currently, gold seems to be in an attempt to stabilize,
coming after the heavy sell-off overnight,” said Yeap Jun Rong,
a market strategist at IG.
“The bearish momentum could continue to drive a drift lower
in prices until the FOMC (Federal Open Market Committee) meeting
next week, where a hawkish Fed is the likely outcome.”
Benchmark 10-year U.S. Treasury yields hovered
near their highest level since June, while the dollar was
heading for a weekly rise against its rivals.
Markets are pricing in a 75-basis-point rate hike by the
U.S. central bank at its Sept. 20-21 policy meeting after
consumer prices unexpectedly rose in August.
Data on Thursday showed that U.S. retail sales unexpectedly
rose in August as lower gasoline prices supported spending,
while U.S. jobless claims fell last week.
“A 75-bp hike is fully baked in, so what everyone wants to
know is whether the Fed will retain an aggressive rate of
tightening as we head into 2023. Gold is likely to suffer with a
hawkish hike,” said Matt Simpson, a senior market analyst at
Gold is highly sensitive to rising U.S. interest rates, as
they increase the opportunity cost of holding non-yielding
bullion while boosting the dollar.
Meanwhile, India on Thursday slashed the base import prices
Spot silver fell 0.9% at $18.98 per ounce. Platinum
fell 1.7% to $889.19 while palladium was down 1.7%
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by
Uttaresh.V, Subhranshu Sahu and Sherry Jacob-Phillips)