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Dollar set for best week since February
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Silver snaps five-week winning streak
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Platinum scales over one-year peak
(Updates prices)
By Deep Kaushik Vakil
April 21 (Reuters) - Gold prices fell sharply on Friday
and were headed for their worst week in eight as hawkish remarks
by U.S. Federal Reserve officials through the week bolstered
bets for at least one more interest rate hike and buoyed the
dollar.
Spot gold dropped 1.2% to $1,979.63 per ounce by 2:35
p.m. EDT (1835 GMT). U.S. gold futures settled 1.4% lower
to $1,990.50.
Bullion has shed about 1.2% so far this week, pressured by
the dollar's gains overall, which made bullion more expensive
for overseas buyers. Fed officials said on Thursday inflation remains "far above"
the central bank's 2% target. Fed Governor Michelle Bowman
reiterated that more work needs to be done to tame inflation.
While a rate hike will initially dull gold's appeal, an
eventual pause will send gold to its recent all-time highs, said
Bob Haberkorn, senior market strategist at RJO Futures, adding
that "the Fed has a breaking point where they can't go anymore
on rates without doing significant damage to the economy."
Gold was also pressured by an S&P Global survey that showed
U.S. business activity accelerated to an 11-month high in April,
which was at odds with growing signs that higher interest rates
were cooling demand.
Markets now see an 85.4% chance of a 25-basis-point rate
hike at the Fed's May 2-3 meeting. Rate hikes raise the opportunity cost of holding
non-interest-bearing gold.
Silver fell 1.1% to $25.02 per ounce, headed for its
first weekly decline in six.
Platinum and palladium , used in catalytic
converters to curb emissions in cars, bucked the trend. Platinum surged 2.7% to an over one-year high at $1,122.80, while
palladium gained 1.1% to $1,604.74, on track for its best
week since November.
Supply concerns due to rampant power issues in key producer
South Africa could be driving platinum, while palladium was
additionally benefiting from short-covering, said Daniel Ghali,
commodity strategist at TD Securities.
(Reporting by Deep Vakil in Bengaluru; Editing by Shounak
Dasgupta, Sherry Jacob-Phillips and Krishna Chandra Eluri)
