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Gold eyes fourth straight weekly gain on dollar weakness

Despite a little decline on Friday, gold prices were still expected to rise for the week as the dollar overall declined, offsetting pressure from rising bond yields and anticipation of additional rate increases from the U.S. Federal Reserve.

August 12, 2022 / 06:05 PM IST

Gold prices inched lower on Friday but were still on track for a weekly rise, as an overall weakness in the dollar offset pressure from an uptick in bond yields and expectations of further rate hikes from the U.S. Federal Reserve.

Spot gold was down 0.2% at $1,786.06 per ounce, as of 1200 GMT. Bullion was still headed for its fourth straight weekly gain, up nearly 1% in its longest weekly rally in almost a year.

U.S. gold futures fell 0.3% to $1,801.10.

The dollar edged 0.4% higher on the day, but was down about 1% for the week. A weaker greenback makes bullion less expensive for overseas buyers.

"Inflation easing a little has aided gold's rally to $1,800. But risk assets were quickly preferred and gold's rally stalled. If risk appetite fades over the next couple of weeks, that could support a move above $1,800," OANDA analyst Craig Erlam said. [MKTS/GLOB]

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Market participants have toned down expectations of an aggressive rate hike by the Fed after cooler-than-expected inflation data released earlier this week. However, recent comments by some Fed officials continue to highlight a hawkish tilt.

Gold's appeal tends to dim amid high-interest rate environment, as the metal yields no interest.

Fed's Mary Daly said on Thursday that while a half-percentage-point interest rate hike in September "makes sense," she is open to the possibility of a bigger hike.

"The ongoing tightening of monetary policy is still having a braking effect on gold… Market participants remain correspondingly cautious and have been withdrawing funds from the gold ETFs of late," Commerzbank said in a note. [GOL/ETF]

Weighing on gold, U.S. Treasury yields hovered near a three-week high. [US/]

Spot silver fell 0.1% to $20.28 per ounce, palladium slipped 1.5% to $2,242.90.

Platinum fell 0.8% to $948.29 per ounce.

 
Reuters
first published: Aug 12, 2022 05:52 pm
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