Off The Wire
Gold heads for fourth weekly dip as dollar, Fed hike bets dim appeal
May 13 (Reuters) - Gold fell on Friday and was headed for a fourth consecutive weekly decline pressured by overall strength in the dollar on prospects of aggressive interest rate hikes by the U.S. Federal Reserve.
Spot gold fell 0.2% to $1,817.39 per ounce by 1039 GMT, after hitting $1,810.86, its lowest since Feb. 7. Bullion has lost over 3% so far this week.
U.S. gold futures dropped 0.5% to $1,816.40 per ounce.
The Fed being the most hawkish of major central banks and safe-haven flows into the greenback are weighing on gold, said Fawad Razaqzada, market analyst at City Index
"Gold has not found any kind of support in times like now, when you'd expect haven demand to be strong... We've seen lots of support levels breakdown, which is discouraging for short-term traders," Razaqzada added.
The dollar index was bound for a sixth consecutive weekly gain, hovering near a 20-year high, as concerns persisted the Fed's actions to tame inflationary pressures would crimp global economic growth.
Last week, the Fed increased its benchmark overnight interest rate by an aggressive half-a-percentage point. read more
Rising U.S. interest rates and bond yields raise the opportunity cost of holding bullion.
"Gold's current trading level below $1,830 looks too cheap, yet any gains are likely to be capped with a series of rate hikes diminishing gold's appeal as a non-yield bearing asset," Kinesis Money analyst Rupert Rowling said in a note.
Gold's recent slide has wiped out most gains made in an initial rally driven by safe-haven demand amid Russia's invasion of Ukraine, which had pushed prices to near-record levels in mid-March. read more
Spot silver rose 0.6% to $20.78 per ounce, but has fallen about 7% this week, the most since late January.
Platinum rose 0.7% to $950.06 and palladium gained 1.5% to $1,936.55 though both were on track for weekly losses.