Gold heads toward fifth weekly decline on dollar strength

Author of the article: Gold prices eased on Friday and were poised for a fifth straight weekly loss, as expectations of a sizeable rate hike by the U.S. Federal Reserve powered the dollar and eroded bullion’s appeal. Spot gold firmed to $1,708.19 per ounce by 1254 GMT, but has lost about 2% so far this…
Gold heads toward fifth weekly decline on dollar strength

Author of the article:

Gold prices eased on Friday and were

poised for a fifth straight weekly loss, as expectations of a

sizeable rate hike by the U.S. Federal Reserve powered the

dollar and eroded bullion’s appeal.

Spot gold firmed to $1,708.19 per ounce by 1254 GMT,

but has lost about 2% so far this week. U.S. gold futures

also eased 0.1% to $1,704.90.

The dollar held at a two-decade high, making bullion

more expensive for overseas investors.

Gold looks to be in a free fall, and typically buyers will

restrain themselves until the price finds some decent support,

said independent analyst Ross Norman.

With the U.S. dollar undergoing an epic rally, it’s apparent

that investors see it as the ‘go-to’ safe-haven asset, Norman

said, adding, there’s “some significant redemptions in the gold

ETF on a daily basis as stale institutional longs liquidate.”

Two of the Fed’s most hawkish policymakers said on Thursday

they favored another 75-basis-point interest rate increase this

month.

Meanwhile, U.S. retail sales increased more than expected

June.

There are chances of a slight bounce back in prices as long

as the stiff support of $1,670 holds the downside, said Hareesh

V, head of commodity research at Geojit Financial Services,

adding that the critical event, however, would be the next FOMC

meeting.

Higher interest rates raise the opportunity cost of holding

non-yielding bullion.

The market also took stock of the EU’s plans to adopt its

seventh package of sanctions against Russia, which will add a

ban on imports of Russian gold.

“The EU sanctions against Russian gold will have rather

limited impact. I think this move is more of a gesture. Likely

the Russians will be able to find buyers outside the EU quite

satisfactorily,” Norman said.

In the physical gold market, buyers in some Asian hubs were

drawn to a dip in prices.

Spot silver rose 1.2% to $18.60 per ounce, but was

headed for a weekly decline.

Platinum climbed 0.3% to $846.12, while palladium

fell 2.4% to $1,851.75.

(Reporting by Arundhati Sarkar in Bengaluru

Editing by Sherry Jacob-Phillips, Mark Potter and Jonathan

Oatis)

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