Gold Prices Tumble Despite Friday's Gains on Hawkish Fed Bets
Gold prices edged higher on Friday but still ended the week in the red as investors weighed the potential for another interest rate hike from the Federal Reserve. The SPDR Gold Shares ETF (GLD) rose by 0.4% on Friday, but its weekly loss was about 1.5%. This move was influenced by a stronger dollar and rising Treasury yields.
The US Treasury yield curve has been steepening in recent weeks, with the yield on the two-year note reaching a 15-year high. This increase in borrowing costs is a sign that investors are expecting higher interest rates from the Fed. The market expects another rate hike next month to combat inflation.
Gold prices have been under pressure as investors favor assets that pay interest and benefit from rising yields, such as Treasury bonds. The strong dollar has also made gold more expensive for foreign buyers, further weighing on prices.