Dollar Strengthens Gold Prices as Fed Keeps Hawkish Tone
Gold prices rose slightly on Friday but were set to end the week in the red, weighed down by a strengthening dollar and expectations of higher US interest rates.
The spot price of gold climbed 0.2% to $4,288.36 per ounce at 0200 GMT, but was still down 2% for the week so far.
US gold futures edged up 0.6% to $4,323.10, while the dollar continued its weekly gain, making greenback-priced metals more expensive for holders of other currencies.
The Federal Reserve's decision to keep interest rates elevated to combat inflation has strengthened the dollar and pushed down gold prices, according to Kelvin Wong, senior market analyst at OANDA.
Two Fed policymakers recently suggested additional rate hikes may be needed to curb high inflation, with Philadelphia Fed President Anna Paulson stating that returning inflation to 2% is a top priority.
While gold is often seen as a hedge against inflation, higher interest rates can reduce demand for the metal by making other assets more attractive.