Saturday, May 28

Gold prices firm, but set for 3rd weekly fall on Fed rate hike prospects

Article content

Gold prices were on track for a third

straight weekly decline on Friday as investors fretted over the

prospects of aggressive rate hikes from the US central bank,

though slight pullback in dollar helped the precious metal to

tick higher on the day.

Spot gold rose 0.3% to $1,881.95 per ounce by 1017

GMT, but was down 0.8% for the week. US gold futures

were up 0.4% to $1,883.50.

The dollar index eased 0.4% after hitting a fresh

20-year high, making gold less expensive for those holding other

Advertisement 2

Article content

currencies. However, the US currency was headed for fifth

weekly gain, while the benchmark US Treasury yields

held near the key 3% level.

“Gold’s got some pretty strong headwinds, notwithstanding

serious inflation, from both the dollar index being up to

multi-decade highs and the 10 year US Treasury back above the

3% level,” independent analyst Ross Norman said.

European stocks headed for their worst week in two months as

investors expect bigger interest rate hikes will be needed to

rein in inflation.

While gold is perceived as an inflation hedge, higher US

interest rates lift the opportunity cost of holding zero-yield


The US Federal Reserve raised its benchmark on Wednesday

rate by half a percentage point, the most in 22 years, but

Advertisement 3

Article content

Chairman Jerome Powell explicitly ruled out raising rates by

three-quarters of a percentage point in a coming meeting.

“Gold was unable to capitalize on Powell’s less hawkish than

expected message this week, with bullion bulls aware that US

rates are bound to rise anyway,” Han Tan, chief market analyst

at Exinity, said.

“Should Friday’s non-farm payrolls point to a resilient US

jobs market that paves the way for more Fed policy tightening,

that could strengthen the cap on gold’s upside.”

Silver fell 0.5% to $22.39 per ounce, platinum

fell 2.6% to $954.94 and palladium fell 2.3% to


(Reporting by Eileen Soreng and Seher Dareen in Bengaluru

Editing by Tomasz Janowski)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Leave a Reply

Your email address will not be published.