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Gold set to post a near 1 percent weekly fall on rate hike bets

Spot gold edged up 0.1 percent to $1,823.70 per ounce by 1256 GMT. U.S. gold futures fell 0.2 percent to $1,825.40.

June 24, 2022 / 07:04 PM IST
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Gold prices steadied on Friday as the dollar eased, but bullion’s constant tussle with expectations for aggressive tightening by the Federal Reserve kept it on course for a weekly fall of nearly 1 percent.

Spot gold edged up 0.1 percent to $1,823.70 per ounce by 1256 GMT. U.S. gold futures fell 0.2 percent to $1,825.40.

The dollar index slipped 0.1 percent, making gold less expensive for overseas buyers.

"In the near term at least, we still expect continued volatility in gold. We expect gold to remain in the established range of between $1,800 and $1,870 per ounce," Commerzbank analyst Carsten Fritsch said.

St. Louis Fed President James Bullard said on June 24 that the Federal Reserve must act boldly in raising interest rates to contain inflation.

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Higher rates raise the opportunity cost of holding non-yielding bullion, and the Fed’s aggressive stance, coupled with overall strength in the dollar, has set gold up for a weekly decline.

"We still see the potential for gold hitting a fresh record high during the second half, as growth slows and inflation continues to remain elevated," Saxo Bank analyst, Ole Hansen said in a note.

"The most important (supporting factor) is the risk of current central bank actions driving a hard landing, meaning a U.S. recession could emerge before inflation is being brought under control, thereby creating a period of stagflation, which historically has been bullish for gold."

In the physical gold market in Asia, dealers offered bigger discounts in India this week to lure buyers as the wedding season concluded, while some consumers in China bought bullion to hedge against economic concerns.

Spot Platinum rose 0.4 percent to $910.62 per ounce, palladium jumped nearly 1 percent to $1,860.85. Silver fell 0.6 percent to $20.81.
Reuters
first published: Jun 24, 2022 07:04 pm
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