Gold prices were set on Friday for their biggest quarterly fall since early 2021, as aggressive interest rate hikes by the US Federal Reserve and commitment to deliver more dented the zero-yielding metal’s appeal.
Spot gold ticked 0.1% higher to $1,661.04 per ounce, as of 0405 GMT, as the dollar index slipped from a 20-year high, making the metal less expensive for buyers holding other currencies.
Gold prices have fallen about 8% so far in the quarter, but gained 1.1% this week after two straight weeks of falls.
US gold futures rose 0.1% to $1,673.10. “Already, the upside momentum for gold is waning,” said City Index analyst Matt Simpson. “It’s also paused within a prior consolidation zone around the $1,660–$1,680 area.
Unless we see another leg lower for the dollar, then the upside could be limited for gold.“
Although gold is considered a hedge against inflation, a series of aggressive US rate hikes this year has raised the opportunity cost of holding the metal and made the dollar the safe haven of choice.
Fed policymakers have been resolute in raising interest rates despite a turmoil in global financial markets, with Cleveland Fed President Loretta Mester saying on Thursday “at this point price stability is still job one.”
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.29 tonnes on Thursday, marking the first inflow in two weeks.
Spot gold may extend its gains to $1,671 per ounce, according to Reuters technical analyst Wang Tao.
Spot silver was flat at $18.81 per ounce, while platinum fell 0.2% to $863.28.
Both metals were headed for their second straight quarterly decline.
Palladium slipped 0.8% to $2,182.69, but was up about 13% so far in the quarter.
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