Gold Declines but is Poised for First Weekly Gain Since April Amid Growth Concerns

By Gina Lee

Gold experienced a slight decline on Friday morning in Asia but is on track for its first weekly gain since mid-April 2022. The precious metal has retreated from two-decade highs, with increasing concerns regarding U.S. economic growth prompting investors to seek the safety of gold.

As of 12:34 AM ET, gold prices dipped 0.01% to $1,841.05, marking an approximate 1.5% rise for the week.

"Recession fears are now shifting to concerns over U.S. growth, which is benefiting gold," stated Stephen Innes, managing partner at SPI Asset Management, in a Reuters interview. However, he noted that the U.S. Federal Reserve’s aggressive rate hike strategy and quantitative tightening remain significant challenges for gold prices.

According to a recent Reuters poll of economists, the U.S. central bank is expected to raise interest rates higher by the end of 2022 than previously predicted, which keeps the risks of a recession very much alive.

In the Asia-Pacific region, the central bank maintained the one-year loan prime rate at 3.7% while reducing the five-year rate to 4.45%, down from 4.6% the previous month. A policy decision from another central bank is also anticipated in the coming week.

"It’s been an eventful week; after dipping below $1,800 due to rising real yields, it cleared the way for long-term strategic buyers to enter amid a technical downtrend," Innes added.

This increased demand is reflected in the SPDR Gold Trust, which reported a 0.66% rise in its holdings to 1,056.18 tons on Thursday, following a series of losses.

In other precious metals, silver decreased by 0.3% to $21.83 per ounce but has seen an increase of about 3.6% over the past week. Platinum dropped 0.7%, while palladium fell slightly by 0.1%, although both are expected to end the week with gains of approximately 1.7% and 2.8%, respectively.