This photo shows gold bars stacked in rows.

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Gold prices fell to a one-week low on Friday, weighed down by gains in the dollar after Federal Reserve Governor Christopher Waller called for early tapering of economic support to help chart a tighter monetary policy.


Spot gold fell 0.6% to $1,848.05 per ounce by 14:42 ET. U.S. gold futures settled 0.5% lower at $1,851.60.

The dollar index rose 0.5% against its rivals, making gold more expensive for other currency holders.

“Gold prices are declining after some hawkish Fed speak about accelerated tapering boosted the dollar,” said Edward Moya, senior market analyst at brokerage OANDA.

“Inflation and Fed speak are the primary catalyst for gold and right now traders will need to see what happens over the next couple of weeks before having strong conviction on assessing what the Fed will do regarding interest rates.”

Waller said the U.S. central bank should increase the pace of its reduction in bond purchases to give more leeway to raise interest rates from their near zero level. 

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Stock markets went into a tailspin after news that Austria would reimpose a full lockdown o tackle a new wave of coronavirus infections and signs that Germany might do the same.

Saxo Bank analyst Ole Hansen said in a note that lockdowns in Europe have helped provide the yellow metal a fresh boost.

“The recent white-hot inflation prints, especially the 6.2% recorded in the U.S., will likely continue to support gold in its defence against the stronger dollar,” Hansen added.

Elsewhere, silver fell 0.6% to $24.63. Platinum slid 1.8% to $1,028.74, while palladium declined 3.4% to $2,060.24, on course for its first weekly decline in three.

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