Gold on Friday headed towards its biggest weekly fall in about two months, knocked by a stronger dollar and expectations of a sizeable U.S. rate hike.
Spot gold was 0.2% lower at $1,660.96 per ounce by 9:56 a.m. ET (1356 GMT), having earlier touched its lowest since April 2020 at $1653.10, and down about 3% so far this week. U.S. gold futures fell 0.4% to $1,670.40.
Philip Streible, chief market strategist at Blue Line Futures in Chicago, said gold is not benefiting at all despite rising U.S. recession risks following recent economic data, with higher Treasury yields and the dollar also weighing.
"It's not even being perceived as a safe haven," he said.
Although gold is traditionally considered a hedge against inflation and other economic risks, rising interest rates make non-yielding bullion less appealing. Gold's latest decline also came despite a retreat in equities. [.N]
The dollar headed for a weekly gain, making gold more expensive for overseas buyers.
Markets now see a 75% chance of a 75-basis-point rate hike at the end of the Federal Reserve's meeting next week and a 25% chance of a 100-bps increase. [FEDWATCH]
"Gold could be challenged further by the weakened technical outlook with a weekly close below $1,680 potentially seeing the market target the 50% retracement of the 2018 to 2020 rally next at $1,618," Saxo Bank analyst Ole Hansen said in a note.
Meanwhile, physical gold demand picked up in India as domestic prices fell ahead of key festivals, while Chinese premiums climbed. [GOL/AS]
Silver slipped 0.6% to $19.04 per ounce.
"The recent appreciation of the U.S. dollar and rising U.S. Treasury yields remain bearish fundamental elements that are keeping buyers of the two precious metals (gold and silver) scarce," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.Platinum dropped 1.8% to $888.64, while palladium fell 1.7% to $2,100.16.