Gold fell sharply this Friday after touching a maximum of more than a year in the last session, since the The dollar rebounded and a Federal Reserve official signaled the need for another interest rate hike.
Spot gold was down 2.1% at $1,996.09 an ounce, and US gold futures were down 2.2% at $2,009.80.
The dollar index rebounded from one-year lows and the yield on Treasury bonds rose after the Fed Governor, Christopher Waller warned that it is necessary to continue raising rates to control inflation.
Gold competes with the dollar as a haven in times of economic or political turmoil, while the rises in the US currency also reduce the appetite for bullion among foreign buyers.
On the other hand, CME’s FedWatch tool showed that Traders value the possibility of a 25 basis point increase in May at 80.2%, compared to 70% earlier in the week.
According to Daniel Pavilonis of RJO Futures, The metals market is likely to weaken as the “quiet period” approaches before the Fed’s May decision, in which a 25 basis point hike is expected. “Prices will stabilize around $2,000,” he pointed.
Still, analysts said the outlook remained positive amid growing fears of a recession that could prompt the Fed to end its rate-hike cycle. “I continue to expect prices to reach all-time highs and extend their gains to $2,100,” said Phillip Streible of Blue Line Futures in Chicago.
In other precious metals, spot silver fell 2.1% to $25.25 an ounce, after hitting a yearly high of $26.07 earlier in the session, but still posted its fifth consecutive weekly rise. Platinum fell 0.7% to $1,040.07 and palladium rose 0.9% to $1,512.88, but both ended the week higher.
Source: Ambito
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