Sturdy dollar, looming rate hikes push gold to the worst week in 4

Gold edged up on Friday as the dollar paused, but expectations of a significant rate hike in the United States kept metal still below the critical $1,700 level and on track for its worst week in four.

Spot gold was up 0.6% at $1,673.19 per ounce. Gold futures in the United States climbed 0.3% to $1,682.10.

“We saw the dollar turn negative… an acceleration lower on US equities, which may have encouraged a bit of purchasing,” said Philip Streible, chief market analyst at Chicago-based Blue Line Futures. Gold prices are still down approximately 2.5% this week after falling to their lowest level since April 2020. Throughout the week, gold failed to gain on mounting U.S. recession threats, and was “not even viewed as a safe-haven” on occasion, according to Streible.

The dollar momentarily fell negative before stalling, providing some relief to gold.

However, it was still on track for a weekly rise, making gold more expensive for foreign buyers.

The Federal Reserve is expected to raise interest rates by 75 basis points next week, with a 25% probability of raising rates by 100 basis points.

Although gold is regarded as a safe haven against economic danger, rising interest rates make non-yielding bullion less tempting.

“It’s likely that the unexpected fear of a 100bps raise following the disappointing CPI news contributed to the huge decline,” said Tai Wong, senior trader at Heraeus Precious Metals in New York.

“However, it appears improbable, and physical demand for gold is driving a short market ahead of a semi-long weekend with London out on Monday.”

Meanwhile, physical gold demand in India increased as domestic prices decreased ahead of important holidays, but Chinese premiums rose.

Silver futures rose 1.9% to $19.52 per ounce.

Platinum increased in value.

Palladium was down 1% to $905.13.