Gold set for second weekly drop on worries over big rate hikes

Author of the article: Gold prices were flat on Friday but on course for their second straight weekly decline, with worries over major central banks potentially implementing big interest rate hikes to contain runaway inflation weighing on bullion demand. Spot gold was up 0.1% at $1,823.67 per ounce, as of 0439 GMT, after hitting a…
Gold set for second weekly drop on worries over big rate hikes

Author of the article:

Gold prices were flat on Friday but on

course for their second straight weekly decline, with worries

over major central banks potentially implementing big interest

rate hikes to contain runaway inflation weighing on bullion

demand.

Spot gold was up 0.1% at $1,823.67 per ounce, as of

0439 GMT, after hitting a one-week low of $1,820.99 earlier in

the session. U.S. gold futures fell 0.2% to $1,825.80.

Gold prices have dropped about 0.8% this week.

The U.S. Federal Reserve’s commitment to reining in

40-year-high inflation is “unconditional,” its chair Jerome

Powell told lawmakers, even as he acknowledged that sharply

higher interest rates may push up unemployment.

“The U.S. dollar remains firm and expectations now lean

towards a 75-basis-point Fed hike in July. The TIPS spread – a

market-based proxy for inflation expectations – is also near a

four-month low, and these have kept a lid on any gold rally,”

City Index senior market analyst Matt Simpson said.

The dollar was slightly lower, making

greenback-priced gold less expensive for buyers holding other

currencies.

However, benchmark U.S. 10-year Treasury yields firmed,

limiting demand for gold.

Higher interest rates and bond yields raise the opportunity

cost of holding bullion, which yields no interest.

“Gold looks vulnerable over the near-term, given its

inability to break $1,850, its 200-day average, this week,”

Simpson said, adding that, “were it not for the fear of a global

recession then gold would likely be lower than it already

is.”

SPDR Gold Trust , the world’s largest gold-backed

exchange-traded fund, said its holdings fell 0.81% to 1,063.07

tonnes on Thursday from 1,071.77 tonnes a day earlier.

Spot silver firmed 0.3% to $21.00 per ounce and

platinum rose 0.9% to $914.99, but both were set for

weekly losses.

Palladium climbed 1.5% to $1,871.48, and has gained

about 3.2% this week.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Rashmi Aich and Subhranshu Sahu)

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