Gold price extends losses, eyeing worst week since November

Gold extended declines on Friday, eyeing its worst week since late November, as growing expectations of US interest rate hikes pushed the dollar to a multi-month high.

Spot gold dropped 0.8% to $1,783.19 an ounce by noon EDT, the lowest since the first week of January. US gold futures fell 0.6% to $1,784.30 an ounce.

[Click here for an interactive chart of gold prices]

Gold prices slipped below its 100-day and 200-day moving averages in the last session, after the US Federal Reserve reaffirmed plans to end its pandemic-era bond purchases and signalled an interest rate hike in March.

“The current market environment has been very detrimental for gold. Investors are completely reassessing Fed expectations,” Edward Moya, senior market analyst at brokerage OANDA, told Reuters.

“There’s still some momentum selling in gold, but we’re getting closer to a potential bottom now that it has broken past $1,800,” Moya added.

Meanwhile, the rate hike expectations set the dollar on track for its biggest weekly rise in seven months, making gold more expensive for overseas buyers.

However, gold’s credentials as an inflation hedge is likely to attract renewed attention with rising stock market volatility amid a market adjusting to a rising interest rate environment, Saxo Bank analyst Ole Hansen wrote in a note.

Also likely to limit bullion’s decline was the World Gold Council’s forecast that demand for jewellery, small bars and coins would remain strong in 2022. It also expects central banks to continue buying gold but at a slower pace.

(With files from Reuters)