Gold prices fell on Friday and were bound for a second weekly drop, dragged down by elevated U.S. Treasury yields and dollar amid a growing chorus of hawkish comments from Federal Reserve officials.
Spot gold fell 0.2% to $1,624.90 per ounce, as of 0739 GMT, after hitting their lowest level since Sept. 28. Bullion prices have shed 1% this week.
U.S. gold futures lost 0.4% to $1,630.10.
Benchmark 10-year Treasury yields scaled a fresh peak since June 2008, while the dollar index was steady.
Gold could see further declines, as “the Fed is only about halfway through their tightening cycle and there’s probably more room for rates to go up,” said Stephen Innes, managing partner at SPI Asset Management.
Although gold is considered a hedge against inflation and economic turmoil, a rapid rise in U.S. rates have increased the opportunity cost of holding zero-yield bullion.
Adding to the recent hawkish rhetoric, Philadelphia Fed President Patrick Harker on Thursday said the U.S. central bank is “going to keep raising rates for a while.”
Also reinforcing expectations of another oversized rate hike next month, data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week.
However, “most of the headwinds are already priced in, and this will provide a floor to gold prices at around $1,580-$1,620 zone,” said Sugandha Sachdeva, vice president of commodity and currency research at Religare Broking.
The Fed might also go slightly slow on rate hikes after the November meeting as the impact of rising borrowing costs on the economy emerges and that too should be gold supportive, Sachdeva added.
Silver fell 0.9% to $18.49 per ounce, platinum edged 0.2% higher to $915.38, while palladium was flat at $2,058.30. All three metals were set for weekly gains. (Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)