Gold suffers its worst week since November on US rate expectations

File image of an operator placing gold bars at the Krastsvetmet plant in Krasnoyarsk, Russia. September 22, 2017. REUTERS/Ilya Naymushin

Por Kavya Guduru

Jan 28 (Reuters) – Gold deepened its decline in its worst week since late November on Friday, as expectations of rising U.S. interest rates pushed the dollar to a multi-month high.

* Spot gold was down 0.7% at $1,784.40 an ounce by 1548 GMT. The contract hit a six-week low of $1,779.20 earlier in the session, down 2.6% for the week.

* US gold futures fell 0.7% to $1,783.10.

* Gold prices fell below their 100- and 200-day moving averages in the latest session, after the US Federal Reserve reaffirmed its plans to end its pandemic-era bond purchases and signaled a rally. of interest rates in March.

* “The current market environment has been very detrimental to gold. Investors are completely revising Fed expectations,” said Edward Moya, senior market analyst at OANDA brokerage.

* “There is still some selling momentum in gold, but we are approaching a possible bottom now that it has broken above $1,800,” he added.

* Rising rates increase the opportunity cost of holding bullion, which does not pay interest.

* Rate hike expectations send the dollar headed for its biggest weekly rise in seven months, making gold more expensive for foreign buyers.

* However, gold’s credentials as an inflation hedge are likely to attract renewed attention with equity market volatility rising, Saxo Bank analyst Ole Hansen wrote in a note.

* The World Gold Council’s forecast that demand for jewelry, bars and coins will remain strong in 2022 may also limit bullion’s decline. He also expects central banks to continue buying gold, but at a slower pace.

* Spot silver was down 1.6% at $22.37 an ounce, and is expected to fall about 7.5% on the week.

* Platinum was down 2.6% at $995.99, while palladium was down 2.4% at $2,319.20, but has gained nearly 10% this week.

(Reporting by Swati Verma and Seher Dareen in Bengaluru; Editing in Spanish by Ricardo Figueroa)



Reference-www.infobae.com

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