Gold fell 1 percent on Friday and was on track for its biggest weekly loss in 2017 as speculation grew that the US Federal Reserve would press ahead with a rate increase this month. Fed Chair Janet Yellen said on Friday that the central bank is set to raise its benchmark interest rate later this month as long as economic data on jobs and inflation holds up.
Prior to Yellen's comments, the probability of a Fed move in March had already risen to nearly 80 percent, money markets indicated, after hawkish comments from New York Fed chief William Dudley and San Francisco Fed President John Williams. "If there has been a conscious effort (to raise expectations for a rate hike) I'm about to join it," Fed Vice Chairman Stanley Fischer told an economists' forum, when asked about comments by other Fed officials this past week that have boosted market odds of a March rate hike.
Spot gold was down 0.03 percent at $1,234.41 an ounce by 2:22 p.m. EST (1922 GMT), after falling 1 percent to $1,222.51, the lowest since February 15. US gold futures for April delivery settled down 0.5 percent at $1,226.50.
Gold prices have retreated more than 2 percent after failing to decisively break through resistance at their 200-day moving on Monday. "The market has responded very clearly to the more aggressive stance by FOMC members regarding rate hikes in March," Mitsubishi analyst Jonathan Butler said. "It's fair to say that a rate hike in March is pretty much priced into gold."
The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, reported a second daily inflow on Thursday, of 1.8 tonnes, bringing the weekly rise to 4 tonnes. Other precious metals, however, were firm. Spot silver turned up 0.8 percent to $17.89 but was set to close the week lower for the first time in 2017. "True to form, physical demand has not driven silver prices, but political uncertainty has driven greater investor interest in silver," said Standard Chartered in a note. Palladium was 0.1 percent higher at $768, while platinum rose 1 percent to $995.30.