Gold loses shine on strong dollar, Fed rate hike bets


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Gold was on course to fall for a fourth

straight week on Friday, hurt by the dollar’s ascent and as bets

for steep interest rate hikes gained traction after healthy U.S.

jobs data.

Spot gold was up 0.1% at $1,741.94 per ounce by 2:49

p.m. ET (1849 GMT). Bullion has lost about 3.7% so far this

week, which would be its worst since mid-May.

U.S. gold futures settled up 0.2% at $1,742.30.

Lately, gold has failed to attract safe-haven flows despite

growing recessions risks as investors have instead opted for the

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dollar, which has marched to fresh two-decade highs.

“The jobs data pushed down gold, already struggling after

such a strong dollar rally. However, there is some bargain

hunting coming through in gold here,” said RJO Futures senior

market strategist Bob Haberkorn.

U.S. job growth was more than expected in June and the

unemployment rate remained near pre-pandemic lows, signaling

persistent labor market strength that gives the Federal Reserve

ammunition to deliver another 75-basis-point rate increase later

this month.

Higher interest rates sour the appeal of gold by translating

into increased opportunity cost of holding the asset since it

yields no interest.

“In the short term, we still see gold supported by recession

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risks. Following the recent correction, we expect prices to

consolidate,” said Carsten Menke, head of Next Generation

Research at Julius Baer.

“A lasting rebound looks rather unlikely assuming that the

Fed is able to fight inflation without pushing the economy into

recession.”

In physical markets, demand improved slightly in India after

domestic prices eased, while concerns over fresh coronavirus

outbreaks kept a leash on activity in top consumer China.

Spot silver rose 0.4% to $19.27 per ounce, while

platinum rose 2% to $890.56.

Palladium rose 9.2% to $2,174.18, and was set for its

third straight week of gains.

(Reporting by Ashitha Shivaprasad and Arundhati Sarkar in

Bengaluru; Editing by Vinay Dwivedi and Devika Syamnath)

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