Gold prices declined on Friday and are on track for a weekly loss as the U.S. dollar strengthened and expectations grew that the Federal Reserve may keep interest rates higher for a longer period to combat inflation.
Spot gold fell 0.2% to $4,270.40 per ounce and has lost more than 2% since the beginning of the week. Meanwhile, U.S. gold futures rose slightly by 0.2% to $4,304.80 per ounce.
The stronger dollar has added pressure to gold because it makes dollar-priced commodities more expensive for buyers using other currencies, reducing demand from international investors.
Gold also came under pressure after comments from two Federal Reserve officials suggested that another interest rate increase could be necessary if inflation remains elevated. Their remarks followed the Fed’s recent decision to raise interest rates by a quarter percentage point.
Investors often view gold as a hedge against inflation, but higher interest rates can reduce its attractiveness because gold does not provide interest or yield. As returns on bonds and other interest-bearing assets rise, some investors shift their money away from precious metals.
Other precious metals also saw mixed performance:
- Silver fell 0.5% to $63.58 per ounce.
- Platinum was little changed at $1,749.61 per ounce.
- Palladium dropped 1.3% to $1,257.70 per ounce.
Overall, stronger dollar gains and expectations of tighter U.S. monetary policy continue to weigh on gold prices despite ongoing inflation concerns.
