Gold Prices Slip as Fed Rate Hikes Weigh on Demand
Gold prices are experiencing a weekly loss, down about 1.7 per cent as of Friday. Despite this drop, spot gold rose 0.6 per cent to $4,304.71 per ounce on the same day, while US gold futures increased by 1 per cent to $4,340.
The precious metal's decline can be attributed to rising US Treasury yields and growing expectations of Federal Reserve rate hikes, which are reducing demand for gold as investors shift towards yield-bearing assets.
Nikos Tzabouras, a senior market analyst at Tradu.com, notes that gold found support on Friday due to the pullback in oil prices, but warns that the metal is still headed for weekly losses due to higher interest rates and bond yields increasing the opportunity cost of holding gold.
Gold demand in India has picked up modestly this week as lower prices drew in buyers ahead of the festive season. The decline in oil prices and a 0.2 per cent easing of the dollar also made greenback-priced bullion more affordable for holders of other currencies.