Weekly loss expected for gold

Gold prices recorded a limited increase on the final trading day of the week, yet maintained a trend toward posting a weekly loss. The strengthening of the dollar in global markets, the rise in US Treasury bond yields, and expectations that the US Federal Reserve (Fed) may keep interest rates high for longer have created pressure on the precious metal.

The spot price of gold rose 0.2 percent to 4,288.36 dollars. Despite this, gold is heading for a decline of approximately 2 percent for the week. US gold futures increased by 0.6 percent to 4,323.10 dollars.

Because gold is priced in dollars, the strengthening of the US currency makes gold more expensive for investors using other currencies. This is cited as one of the primary factors putting pressure on short-term demand.

The main agenda in the markets continues to be expectations regarding the Fed's interest rate path. OANDA Senior Market Analyst Kelvin Wong stated that the pricing of a more hawkish Fed policy is supporting the dollar and creating pressure on gold.

Following the 25 basis point hike in the policy rate in the US last week, expectations that rates could remain high for a long time have strengthened. The emphasis on fighting inflation from Fed officials has also fueled these expectations. While Philadelphia Fed President Anna Paulson stated that returning inflation to the 2 percent target is a priority, comments from New York Fed President John Williams also signaled that the possibility of a tight monetary policy stance may remain on the agenda.

A high-interest-rate environment can reduce the appeal of gold, which does not offer interest yields. Nevertheless, gold continues to be monitored as a traditional safe haven and hedging tool during periods of inflation and economic uncertainty.

J. Rotbart & Co. Founder Joshua Rotbart stated that he remains optimistic about gold for the remainder of the year. According to Rotbart, geopolitical tensions and rising public debt could support demand for safe-haven assets.

Expectations of weekly losses also came to the fore for other precious metals. Spot silver fell 0.1 percent to 63.81 dollars, while platinum rose 0.5 percent to 1,756.90 dollars. Palladium lost 1.3 percent in value, falling to 1,257.56 dollars. Silver, platinum, and palladium are also expected to finish the week with a decline.

News Source: 12punto