Gold set for 5th weekly fall on dollar rally, rate hike fears

Gold prices steadied on Friday, with bullion on course for a fifth straight weekly decline as a relentless surge in the dollar and fears of aggressive U.S. interest rate hikes weighed on demand.

FUNDAMENTALS


* Spot gold inched up 0.1% to $1,711.26 per ounce by 0116 GMT. U.S. gold futures firmed 0.1% to $1,708.00.

* Gold prices are down 1.8% this week.

* The dollar was perched near 20-year highs, suppressing demand for greenback-priced bullion among buyers holding other currencies. A strong dollar sent gold down more than 2% in the previous session.

* However, the benchmark U.S. 10-year Treasury yield edged lower, slightly buoying zero-yield gold.

* Two of the Fed’s most hawkish policymakers on Thursday said they favoured another 75-basis-point interest rate increase at the U.S. central bank’s policy meeting this month, not the bigger rate hike traders had raced to price in after a report Wednesday showed inflation was accelerating.

* Higher interest rates raise the opportunity cost of holding non-yielding bullion.

* SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.28% to 1,016.89 tonnes on Thursday, from 1,019.79 tonnes on Wednesday.

* Spot silver was flat at $18.38 per ounce, but has fallen about 4.8% in what could be its seventh straight weekly loss.

* Platinum was little changed at $843.33. It has dropped about 6% this week, potentially its worst in at least three months.

* Palladium firmed 0.4% to $1,903.67. It has lost about 12.8% this week, the most since November.

DATA/EVENTS (GMT)


0200 China Urban Investment (YTD) YY June

0200 China Retail Sales YY June

0200 China GDP YY Q2

1100 EU Reserve Assets Total June

1230 US Retail Sales MM June

1315 US Industrial Production MM June

1400 US U Mich Sentiment Prelim July

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