Gold heads for weekly loss as inflation and rate fears grow
Gold prices declined on Friday and were on track to post a weekly loss, as concerns over inflation and the possibility of further U.S. Federal Reserve interest rate hikes continued to weigh on the market, News.Az reports, citing Reuters.
Spot gold dropped 0.8% to $4,182.47 per ounce at 0610 GMT and was heading for a weekly decline of 3.4%. U.S. gold futures for August delivery, however, increased 2.2% to $4,203.60.
Gold prices declined on Friday and were on track to record a weekly loss, under pressure from worries about inflation and expectations of possible additional U.S. Federal Reserve interest rate increases.
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Spot gold fell by 0.8% to $4,182.47 per ounce as of 0610 GMT and was set for a weekly decline of 3.4%, while U.S. gold futures for August delivery rose 2.2% to $4,203.60.
Gold has fallen roughly 20% since the Iran war began, amid fears that rising energy costs may fuel inflation, which could push central banks to keep interest rates higher and increase the opportunity cost of holding the non-yielding metal.
U.S. producer prices rose more than expected in May, resulting in the largest annual increase in 3½ years, as the Middle East conflict pushed up the cost of energy products.
Traders are currently pricing in a 60% probability of a U.S. rate hike in December, according to the CME Group’s FedWatch tool.
Donald Trump said on Thursday that the United States and Iran could sign a peace deal as early as this weekend, which would reopen the Strait of Hormuz to shipping. However, Iran responded that it had not reached a final decision on any agreement.
Meanwhile, holdings of the largest gold-backed exchange-traded fund (ETF), New York’s SPDR Gold Trust, decreased by around 0.3% to 923.89 metric tons on Wednesday.
ANZ cut its year-end gold price forecast by $400 to $5,200, citing recent volatility in the market.
Spot silver fell 0.9% to $66.78 per ounce, while platinum rose 0.4% to $1,725.99, with both metals still on track for weekly losses. Palladium increased 1.7% to $1,290.15 and has gained about 5% so far this week.
By Nijat Babayev
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