Gold Struggles Near $4,300 as Yields Test Safe-Haven Trade

Gold prices have been struggling near $4,300 as a stronger dollar and rising US Treasury yields test investor appetite for the non-yielding metal. Despite edging higher on Friday, spot gold remained down about 2% for the week.

The US Federal Reserve's decision to raise interest rates above 5% has increased borrowing costs, making it more expensive for investors to hold gold. This has raised questions about whether safe-haven demand can withstand a more hawkish Fed.

Philadelphia Fed President Anna Paulson said underlying inflation remains in a range of about 2.5% to 3%, and modest further tightening could be warranted if the economy develops as expected.

MUFG strategist Soojin Kim noted that gold is being pulled in opposite directions by geopolitical uncertainty, which supports haven demand, and restrictive US monetary policy, which reduces the appeal of bullion relative to yield-bearing assets.