Gold prices edged higher on Friday but were bound for a weekly loss as the US Federal Reserve projected higher interest rates for a longer period.
Spot gold rose 0.2% to $1,780.63 per ounce, as of 0230 GMT, but was down nearly 1% so far in the week.
US gold futures were up 0.1% at $1,789.40.
The dollar index slipped 0.2%. A weaker dollar makes bullion cheaper for overseas buyers. “Gold’s fall this week is in the aftermath of the Fed meet.
Also, with recession risks rising, the US dollar will emerge as the preferred safe haven,“ said Ilya Spivak, head of global macro at Tastytlive.
The Fed on Wednesday raised interest rates by 50 basis points as expected, but Chair Jerome Powell said the central bank would deliver more hikes next year even as the economy slips towards a recession.
Although gold is traditionally known as a hedge against inflation and economic uncertainties, higher interest rates tend to dim bullion’s appeal by increasing the opportunity cost of holding the non-yielding metal.
Central banks in Europe followed the Fed in slowing the pace of interest rate increases but offered a similar stark message that financial conditions will continue to tighten even as economic performance deteriorates.
Meanwhile, India plans to invite bids to extract gold from 50 million tonnes of processed ore in a cluster of colonial-era mines in the southern state of Karnataka, a senior government official with direct knowledge of the matter said.
Spot silver rose 0.2% to $23.09 per ounce, but was down 1.5% for the week. Platinum gained 0.5% to $1,011.63.
Palladium rose 1.1% to $1,810.51 but was headed for its biggest weekly drop in two months.
Recession risks will lead to weaker industrial demand and this might affect platinum and palladium more because of their use in the automotive industry, Spivak added.
Comments
Comments are closed.