Gold loses shine on strong dollar, Fed rate hike bets
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.
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
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
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
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
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)