Gold prices fell on Friday, as the dollar rose thanks to interest rate hike speculation, but the yellow metal is still holding above the $1750 level.
Gold is on track for a limited weekly gain, as concerns about rising inflation and growth are hurting risk appetite.
Gold prices today
Spot gold fell 0.2% to $1,753.67 an ounce by 0915 GMT.
US gold futures fell 0.2% to $1,754.30.
But the yellow metal is still up about 0.2% in the week, as the dollar’s decline yesterday, Thursday, contributed to gold recording a jump of about 2%.
Support from European shares
Gold was also supported, as European shares fell after the decline of Wall Street and Asia on expectations that euro zone inflation may jump, in light of slowing economic growth.
But some analysts said expectations that the Federal Reserve is likely to gradually reduce its economic support this year continues to pressure gold, as lowering stimulus and increasing interest rates tend to push up government bond yields, increasing the opportunity cost of holding gold.
The dollar started the last quarter of 2021 near its highest levels in the year, and is heading towards achieving its best weekly performance since June.
The dollar was supported as a safe-haven asset by cautious market sentiment due to COVID-19 concerns, volatile Chinese growth and lack of progress in Washington ahead of a looming deadline to raise the US government’s borrowing cap.
The dollar index settled at 94.287, after gaining 1.1% since the beginning of this week, which is the largest weekly rise since late June.
The euro also settled today, Friday, at $1.1578, but it fell about 1.3 percent in the week, and fell from a major support level at about $1.16, touching its lowest level since July 2020.
The yen rose from its lowest level in 19 months reached during the night, but lost 0.6% in the week and double that amount in two weeks as the rise in US Treasury yields attracted inflows from Japan to the dollar.
The Japanese currency was last at 111.21 per dollar.
The benchmark 10-year Treasury yields are up for the sixth consecutive week and real 10-year yields, minus inflation, are rising much faster than their European counterparts.
Commodity-linked currencies jumped against the dollar on Thursday following a Bloomberg report that China directed energy companies to source winter supplies at any cost, but came under pressure on Friday.
Beijing is rushing to deliver more coal to utilities to restore supplies in light of an electricity crisis that has disrupted markets due to its potential negative impact on economic growth.
The Australian dollar fell 0.3% to $0.7203 and fell 3.6% in the third quarter of the year, recording the worst performance among the G10 currencies against the dollar, as prices of iron ore, which is Australia’s main export commodity, fell sharply.
The New Zealand dollar fell 0.2% to $0.6882.
The British pound fell 0.2% to trade just above a nine-month low of $1.3452.
precious metals prices
As for other precious metals, silver fell 0.1% to $22.22 an ounce. Platinum rose 0.2% to $965.11, and palladium fell 0.6% to $1,898.55.