Gold Prepares for Fourth Consecutive Weekly Loss Due to Dollar Strength and Fed Hike Speculation, Reports Reuters

By Ashitha Shivaprasad

Gold prices dropped more than 1% on Friday, marking a potential fourth consecutive week of decline. The strength of the U.S. dollar and expectations for aggressive interest rate increases have diminished investor interest in bullion.

As of 1:54 PM EDT, gold was down 0.7% at $1,808.89 per ounce, after touching a low of $1,798.86, the lowest level since February 4. The metal has lost nearly 4% this week.

U.S. gold futures settled down 0.9% at $1,808.20.

Federal Reserve Chair Jerome Powell indicated on Thursday that the struggle to control inflation would involve "some pain," as the effects of rising interest rates become apparent.

According to David Meger, director of metals trading at High Ridge Futures, "Gold is being weighed down as the Fed has been committed to raise interest rates at a fast pace, and in addition, the dollar has been extremely strong." He added that "the inflation numbers are what the market will closely watch" moving forward.

Meanwhile, the U.S. dollar is poised for its sixth straight weekly gain, remaining near a 20-year high. While gold is typically viewed as an inflation hedge, it does not yield interest and is particularly sensitive to increases in U.S. short-term interest rates and bond yields.

Kitco senior analyst Jim Wycoff noted that a rebound in global stock markets, accompanied by reduced risk aversion, is also negatively impacting safe-haven metals.

Growth stocks led a recovery in Wall Street’s primary indexes.

Spot silver witnessed a 1.6% increase to reach $20.98 per ounce, though it has declined about 6% over the week, marking its steepest drop since late January.

In the broader market, platinum decreased by 0.8% to $936.51, while palladium rose 1.5% to $1,936.83, recovering after an over 8% drop on Thursday. Meger commented, "Overwhelming concerns about supply disruptions in Russia take precedence in the palladium market, and there is active buying into dips as prices have come down dramatically."