Gold ticks up, but rate hike bets set bullion up for weekly dip

Article content

Gold firmed on Friday as the dollar

eased and economic concerns mounted, but bullion’s constant

tussle with expectations for aggressive tightening by the

Federal Reserve kept it on course for a weekly dip.

Spot gold rose 0.2% to $1,826.20 per ounce by 0914

GMT, after earlier touching a one-week low of $1,820.30. U.S.

gold futures fell 0.1% to $1,827.90.

Gold’s gains are likely driven by a lower dollar, StoneX

analyst Rhona O’Connell said.

She, however, added that some members of the Federal Open

Article content

Market Committee (FOMC) are more dovish now as the word

recession is gathering momentum.

The dollar index slipped 0.2%, making gold less

expensive for overseas buyers.

Fed chair Powell on his second day before the Congress said

the central bank’s commitment to reining in 40-year-high

inflation is “unconditional,” but acknowledged that sharply

higher interest rates may push up unemployment.

Higher rates raise the opportunity cost of holding

non-yielding bullion, and the Fed’s aggressive stance, coupled

with overall strength in the dollar, has set gold up for a

weekly decline of 0.7%.

“We still see the potential for gold hitting a fresh record

high during the second half, as growth slows and inflation

continues to remain elevated,” Saxo Bank analyst Ole Hansen said

Article content

in a note.

“The most important (supporting factor) is the risk of

current central bank actions driving a hard landing, meaning a

U.S. recession could emerge before inflation is being brought

under control – thereby creating a period of stagflation, which

historically has been bullish for gold.”

Meanwhile, Swiss customs officials were looking into the

import of 3.1 tonnes of Russian gold in May to see whether the

deals via Britain might have violated sanctions.

Spot platinum rose 0.9% to $914.46 per ounce,

palladium gained 1.5% to $1,871.12.

Silver was little changed at $20.94 per ounce.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Amy

Caren Daniel)