Gold heads for its biggest weekly loss in more than a year
Premium- Spot gold rose 0.3% to $1,778.14 an ounce at 11 a.m. in New York after climbing as much as 1.3% earlier.
Gold pared early gains after a regional Federal Reserve president said high inflation may call for the U.S. central bank to tighten its monetary policy next year.
It may be appropriate for the Federal Reserve to begin raising interest rates next year given a forecast for inflation above the U.S. central bank’s 2% target, St. Louis Fed President James Bullard said. “I put us starting in late 2022," Bullard said Friday during a TV interview on CNBC, referring to interest-rate projections published Wednesday by the U.S. central bank after a two-day policy meeting.
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The Bloomberg Dollar Spot Index advanced to a more than two-month high after Bullard’s comments, hurting demand for greenback-denominated bullion.
Gold still headed for its biggest weekly loss in 15 months, weighed down by suggestions by Fed officials that monetary policy tightening could start earlier than expected, though Chair Jerome Powell cautioned that discussions about raising interest rates would be “highly premature." The central bank also signaled it was alive to threats of runaway price increases sparked by persistently higher-than-forecast inflation readings.
“Absent inflation expectations threatening to become unanchored -- with the Fed unwilling or unable to calm things -- gold will struggle to return to a bull market," strategists from Macquarie Group Ltd. wrote in a note. The bank expects gold to slide to $1,600 an ounce by the end of the year.
Having broken through several key technical levels in just two days, prices will probably struggle to mount a quick recovery, said Commerzbank AG analyst Carsten Fritsch.
Spot gold rose 0.3% to $1,778.14 an ounce at 11 a.m. in New York after climbing as much as 1.3% earlier. It tumbled to as low as $1,767.34 on Thursday, the lowest since May 3. Prices are down 5.4% this week. Silver and palladium advanced, while platinum slipped. The Bloomberg Dollar Spot Index added 0.3% to extend this week’s gain to 1.6%.
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