Gold Falls Despite Friday Gains as Dollar Strength and Hawkish Fed Sentiment Weigh
Gold prices rose on Friday but are still set to post a weekly loss due to a stronger dollar and expectations of higher US interest rates. Spot gold climbed 0.2% to $4,288.36 per ounce by 0200 GMT.
This week's decline marks the second consecutive weekly drop for gold, with prices down 2%. The dollar is heading for a weekly gain, making greenback-priced metals more expensive for holders of other currencies.
US Treasury yields extended gains, further pressuring gold. Expectations of higher interest rates firmed up after two Fed policymakers suggested additional hikes may be needed to curb inflation.
Philadelphia Fed President Anna Paulson and New York Fed President John Williams both signaled a more hawkish stance on monetary policy. While gold is traditionally seen as a hedge against inflation, higher rates can reduce its demand by increasing the appeal of yield-bearing assets.