Gold Improves, But Set to Post Worst Performance Since March 2020
Gold prices are on the rise early on Friday, but look set to post their worst weekly performance seen in over a year after markets cheered
Gold prices are on the rise early on Friday, but look set to post their worst weekly performance seen in over a year after markets cheered the Fed’s hint for turning hawkish sooner than previously planned. At the time of writing, GOLD is trading at a little above $1,785.
The safe haven appeal of gold took a beating earlier this week on the release of the FOMC statement which indicated interest among a majority of committee members expect rate hikes to begin as soon as 2023, amid a rapid economic recovery underway. This helped the US dollar as well as bond yields climb higher, further exerting pressure on the yellow metal, weakening interest in it among investors.
While the US dollar surged to the highest levels seen in two months, the benchmark 10-year US Treasury yields stayed above 1.50%, raising the opportunity cost of holding non-yielding bullion. In addition, the possibility of higher interest rates will further weigh on gold’s appeal.
In the coming sessions, the precious metal could experience some volatility over geopolitical developments, with US-China relations in focus. According to a senior US official, the White House is planning to schedule a discussion between President Biden and the Chinese President Xi Jinping to take up the issues of human rights in Xinjiang and Hong Kong.
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