Gold heads for weekly loss as stronger dollar, Fed rate outlook weighs

Gold prices ticked up on ‌Friday but were set to post a weekly loss, pressured by a stronger dollar and growing expectations that the Federal Reserve will keep interest rates elevated to contain inflation.

Spot gold ​rose 0.2% to $4,288.36 per ounce by 0200 GMT, but was down 2% ​so far this week.

US gold futures edged 0.6% higher to $4,323.10.

The ⁠dollar was headed for a weekly gain, making greenback-priced metals more expensive ​for holders of other currencies, while US Treasury yields extended gains.

“Focus will definitely continue ​to be on the interest rate situation. When we start to see markets pricing in a much more hawkish Fed, it strengthens the dollar and is negative for gold,” said ​Kelvin Wong, senior market analyst at OANDA.

Expectations of higher-for-longer US interest rates firmed ​after two Fed policymakers said additional hikes may be needed to curb unacceptably high inflation, following ‌last ⁠week’s quarter-point increase in the benchmark rate.“Returning inflation to 2% is a top priority, and I will support the policy path that gets us there while carefully weighing risks to the labour market along the way,” Philadelphia Fed President Anna ​Paulson said.

New ​York Fed President ⁠John Williams also suggested tighter monetary policy is coming.

Although gold is traditionally seen as a hedge against inflation, higher rates ​can curb its demand by increasing the appeal of yield-bearing ​assets.

“I remain ⁠very positive on gold for the rest of the year. Ongoing geopolitical friction and mounting sovereign debt are driving constant demand for safe-haven assets,” said Joshua Rotbart, ⁠founder of ​J. Rotbart & Co.

Spot silver slipped 0.1% to $63.81 per ​ounce, platinum climbed 0.5% to $1,756.90 and palladium fell 1.3% to $1,257.56. All three metals were poised for ​weekly losses.