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NEW YORK: Gold extended declines on Friday and was set for its worst week since late November as growing expectations of US interest rate hikes pushed the dollar to a multi-month high.

Spot gold fell 0.7% to $1,784.40 per ounce at 10:48 a.m. ET (1548 GMT). It hit a six-week low of $1,779.20 earlier in the session, heading for an about 2.6% weekly drop.

US gold futures fell 0.7% to $1,783.10.

Gold prices slipped below its 100-day and 200-day moving averages in the last session, after the US Federal Reserve reaffirmed plans to end its pandemic-era bond purchases and signalled an interest rate hike in March.

“The current market environment has been very detrimental for gold. Investors are completely reassessing Fed expectations,” said Edward Moya, senior market analyst at brokerage OANDA.

“There’s still some momentum selling in gold, but we’re getting closer to a potential bottom now that it has broken past $1,800.”

Rising rates increase the opportunity cost of holding non-yielding bullion.

The rate hike expectations set the dollar on track for its biggest weekly rise in seven months, making gold more expensive for overseas buyers.

However, gold’s credentials as an inflation hedge is likely to attract renewed attention with rising stock market volatility amid a market adjusting to a rising interest rate environment, Saxo Bank analyst Ole Hansen wrote in a note.

Also likely to limit bullion’s decline was the World Gold Council’s forecast that demand for jewellery, small bars and coins would remain strong in 2022. It also expects central banks to continue buying gold but at a slower pace.

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