Hawkish Tilt by Fed Hikes Dollar, Gold Set for Weekly Loss

Gold prices fell on Friday as bullion hurtled towards a third straight weekly drop, hurt by the American dollar’s advance following fresh hawkish rhetoric from Federal Reserve officials.

Spot gold was down 0.8% at $1,823.49 U.S. per ounce early Friday morning, after earlier falling to its lowest since late-December. Bullion has fallen about 2.2% so far this week. U.S. gold futures slipped 1% to $1,832.50.

Two Fed officials said on Thursday the U.S. central bank likely should have lifted interest rates more than it did early this month.

Taking cues from the comments, the dollar index surged to a six-week high, making bullion less attractive for overseas buyers, while bond yields also climbed.

Experts are saying the latest remarks, putting a 50-basis-point rate hike and more than just one other increase back on the table, is benefiting the dollar and weighing on precious metals markets.

They add, while there is potential for gold to recover, it appears limited and would depend on how much the central banks increase rates, beyond what the markets have priced in.

Higher interest rates increase the opportunity cost of holding zero-yield bullion.

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