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Silver eyes fifth weekly gain
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Gold could stabilize around $2,000-analyst
(Updates prices)
By Ashitha Shivaprasad
April 14 (Reuters) - Gold prices pulled back sharply on
Friday after surging to a more than one-year peak in the last
session, as the dollar bounced and a Federal Reserve official
flagged the need for another interest rate hike.
Spot gold was down 1.8% at $2,003.60 per ounce by
01:52 EDT (17:51 GMT). U.S. gold futures settled 1.9%
lower at $2,015.80.
The dollar index bounced off a one-year low and Treasury
yields rose after a key Fed official warned that the central
bank needs to continue hiking rates to tame inflation. Gold competes with the dollar as a safe haven amid economic
or political turmoil, while gains in the U.S. currency also dim
appetite for bullion among overseas buyers.
Also holding back zero-yield gold, the CME FedWatch tool
showed traders were now pricing in a 80.2% chance of a 25
basis-point hike in May compared with a 70% chance at the
beginning of the week.
The metals market will likely weaken as we go into the
"blackout period" ahead of the Fed decision in May with a 25 bps
hike expected, said Daniel Pavilonis, senior market strategist
at RJO Futures.
"Prices will stabilize somewhere around $2,000."
But analysts said bullion's outlook remained positive,
following the stellar run over the past couple of sessions amid
growing recession worries that could prompt the Fed to
eventually end its rate-hike cycle.
"I still expect prices to hit record highs and extend gains to $2,100," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. On the physical front, rally in prices made physical gold buying unattractive across major Asian hubs this week. Silver was down 1.8% at $25.34 per ounce, after rising to a year's high of $26.07 earlier in the session, and is set for a fifth weekly gain. Platinum fell 0.6% to $1,040.42, while palladium slipped 0.4% to $1,493.61, but both were on track for weekly rises. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Rising gold price ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Christina Fincher, Shailesh Kuber and Shweta Agarwal)
