Gold prices fell for the third week in a row on Friday, driven down by a stronger dollar and higher bond rates following further hawkish language from US Federal Reserve officials.
Spot gold was recently down 0.02% at $1,841.15 per ounce, having dropped to its lowest level since late December. So far this week, prices have declined by 1.4%.
Gold futures in the United States finished 0.1% lower at $1,850.20.
The dollar’s rise, along with Fed members’ hawkish outlooks, was impacting the market, according to Philip Streible, chief market analyst at Blue Line Futures in Chicago.
Fed officials suggested this week that the US central bank should have raised interest rates more aggressively than it did earlier this month, with Fed Governor Michelle Bowman repeating the 2% inflation target.
The dollar index rose to a six-week high, making gold less appealing to foreign purchasers, while bond rates rose as well.
The potential cost of storing zero-yielding bullion rises as interest rates rise. The prior metal’s price has dropped roughly 7.3% since its nine-month high earlier this month.
Goldman Sachs predicted that the Fed will raise interest rates three more times this year, by a quarter percentage point each time.
Traders are looking forward to the publication of the latest FOMC minutes and US GDP statistics next week for fresh signals on the pace of rate rises.
“The test for the Fed will occur if and when the economy weakens without inflation declining rapidly… should the Fed react to those potential outcomes by easing policy, then gold should perform well,” said Caesar Bryan, portfolio manager of the Gabelli Gold Fund.
Spot silver rose 0.69% to $21.7492 per ounce, while palladium fell 0.81% to $1,498.4626 per ounce.
Platinum was down 0.11% at $919.2444, after falling to its lowest level since November.
Analysts believe Russia may limit shipments of important metals such as palladium if the US slaps significant tariffs on Russian aluminium imports.