Gold recovered above $3,900 an ounce on Friday after rebounding from a 13-month low, but it is still down roughly 4% this week. Rising Treasury yields, a stronger dollar and expectations of further Fed rate increases keep bullion under pressure.
Gold prices recovered above $3,900 an ounce on Friday after rebounding from a 13-month low in the previous session. Bullion stays under pressure from rising Treasury yields, a stronger dollar and expectations of further Federal Reserve interest-rate increases.
Spot gold climbed 0.7% to $3,904.28 per ounce by 05:02 ET, but was down roughly 4% for this week. December gold futures gained 0.6% to $3,907.45. The U.S. dollar index was little changed at 103.20, though the dollar has firmed by around 0.9% for the week.
Hawkish Fed comments fuel the selloff
Selling has intensified since Tuesday, when stronger-than-expected U.S. consumer inflation data and hawkish comments from Fed officials prompted investors to reassess the interest-rate outlook. Treasury yields have risen, with some maturities adding more than 12 basis points.
ANZ analysts linked gold's retreat this week to rising energy costs, stronger economic data, higher bond yields and a dollar above 103, all of which have weakened investment demand. Elevated rates can dent non-yielding assets like gold, while a stronger dollar weighs on the appeal of the yellow metal to overseas buyers.
Chicago Fed President Austan Goolsbee said on Thursday that the central bank needed to contain inflation before economic activity became overheated. San Francisco Fed President Mary Daly also indicated that additional rate increases would probably be necessary.
Oil and rate bets add to inflation worries
Oil prices have ticked higher since U.S. President Donald Trump said on Thursday that Washington did not need a peace agreement with Iran. Brent crude futures were last hovering around above $95 a barrel, after briefly dipping below $90 only days ago.
Markets are now fully pricing in a quarter-point rate increase in December, with some investors also considering a possible larger-than-normal half-point move.
Source: Investing.com
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