Gold on track for third weekly loss on firm dollar, hawkish Fed signals
- Spot gold was down 0.6% at $4,184.33 per ounce
Gold prices are falling for the third consecutive week, driven by a stronger dollar and the US Federal Reserve's hawkish stance, which diminishes the non-yielding metal's appeal.
- Impact of a stronger dollar on gold prices.
- US Federal Reserve's hawkish monetary policy.
- Expectations for a December US interest rate hike.
- Goldman Sachs' revised gold price forecast.
Gold prices fell on Friday and were on track for a third consecutive weekly decline, as a stronger dollar and hawkish signals from the US Federal Reserve weighed on the non-yielding metal.
Spot gold was down 0.6% at $4,184.33 per ounce, as of 0211 GMT.
The contract was down 0.9% so far this week.
US gold futures for August delivery fell 1% to $4,202.10.
Markets in mainland China and Hong Kong were closed for the Dragon Boat Festival holiday.
The dollar hovered around a one-year high, making greenback-priced bullion more expensive for other currency holders.
“Gold’s rally on the back of the US-Iran peace deal proved short-lived. The resurgent dollar, powered by the Fed’s newly hawkish tone under Kevin Warsh, has stolen the spotlight,” said Tim Waterer, chief market analyst at KCM Trade.
“The new Chairman’s firm stance has effectively neutralised the geopolitical tailwind, reminding everyone that monetary policy still calls the shots.”
Nine of the US central bank’s 19 policymakers now believe they will need to raise the policy rate this year, according to projections published on Wednesday after the Fed announced its decision to leave the policy rate unchanged in Kevin Warsh’s debut policy meeting as chairman.
Inflationary pressures stemming from the Iran war have prompted a growing number of central banks to either raise borrowing costs or signal moves to tame price growth.
Traders now see an 87% chance of a US rate hike in December, jumping from 61% prior to the Fed decision, according to the CME FedWatch Tool.
Gold tends to lose appeal when rates are high, as it does not yield interest.
Goldman Sachs expects gold prices to rise to $4,900 per ounce by December, lower than its earlier forecast of $5,400, as the bank doesn’t expect a Fed rate cut this year anymore.
On the geopolitical front, oil tankers sailed through the Strait of Hormuz and the US said it lifted its blockade on Iran on Thursday.
Spot silver fell 1.5% to $64.83 per ounce, platinum lost 1.3% to $1,674.47, and palladium was down 0.8% at $1,268.65.
Comments