Gold on track for worst week since Feb on hawkish Fed

London, June 24 (BNA): Gold prices on Friday are heading for their biggest weekly percentage drop in more than four months, weighed down by a stronger dollar and hawkish comments by Federal Reserve officials.

Spot gold was up 0.3% at $1,919.99 an ounce as of 2:19 PM ET (1819 GMT), after adding as much as 1.2% as US bond yields fell.

According to Reuters, US gold futures settled up 0.3%, at $1,929.6.

The dollar index rose 0.5 percent to its highest level in a week against its rivals, making gold less attractive to other currency holders.

The dollar strengthened after Federal Reserve Chairman Jerome Powell, testifying before Congress this week, signaled more interest rate hikes, but vowed that the central bank would proceed with caution.

“Powell has been very hawkish. He’s in favor of more rate hikes and doesn’t see any rate cuts anytime soon. This is very bearish on the metals,” said Philip Stripel, chief market strategist at Blue Line Futures in Chicago.

San Francisco Fed President Mary Daly said Friday in an interview with Reuters that two more rate hikes this year is a “very reasonable” expectation.

Higher interest rates in the United States increase the opportunity cost of holding gold.

Bullion is down almost 2% so far this week and has lost more than $150 since breaking the key $2,000 level in early May.

“Investor appetite for gold lacks conviction,” Suki Cooper, an analyst at Standard Chartered Bank, said in a note.

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“The sharp drop in exposure since the last (Federal Reserve) meeting does not necessarily indicate imminent short-covering activity, but does confirm a shift in sentiment as we approach a period of seasonally slowing demand.”

Spot silver rose 0.5% to $22.34 an ounce, but was set for its biggest weekly decline since October 2022. Platinum fell 0.6% at $917.34, on track for its worst week since August 2022.

Palladium settled at $1,283.18, after hitting its lowest level since May 2019 on Thursday.

Palladium could extend this year’s price decline of nearly 30% as demand is threatened by the rapid development and use of electric vehicles.

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