NEW YORK: Gold was on track for its biggest weekly drop in nearly four months on Friday, after demand for the safe-haven metal was hit by hopes of progress in peace talks between Russia and Ukraine as well as a US interest rate hike.
Spot gold slipped 0.6% to $1,931.90 per ounce, as of 10:30 a.m. ET (1430 GMT) and US gold futures fell 0.6% to $1,930.80, weighed by the stronger dollar.
The dollar jumped 0.4% against its rivals, making bullion more expensive for overseas buyers.
“We have seen the invasion-driven momentum and speculative fury (for gold) massively cool off over the past ten days,” said David Jones, chief market strategist at Capital.com.
Bullion is down about 2.7% this week as optimism over the peace talks lifted sentiment in wider financial markets this week, denting demand for safe-haven assets.
“If there is a ceasefire or some sort of a deal, gold could drop fairly quickly,” said Edward Meir, analyst with ED&F Man Capital Markets.
Also adding pressure to bullion, the Federal Reserve raised interest rates by a quarter of a percentage point this week and forecast an aggressive plan to push borrowing costs to restrictive levels next year. Higher interest rates tend to raise the opportunity cost of holding non-interest paying gold.
Spot palladium edged up 0.1% to $2,513.35 per ounce, but was set for a weekly fall of more than 10% as fears about supply from top producer Russia eased.
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