Gold Heads for Fourth Straight Weekly Loss as Strong US Dollar, Fed Rate Hike Bets Weigh
Gold prices fell on Friday and were on track for a fourth consecutive weekly decline, pressured by a stronger U.S. dollar and growing expectations that the Federal Reserve will raise interest rates again later this year.
Spot gold slipped 0.7% to US$3,998.74 per ounce as of 03:52 WIB, while U.S. gold futures declined 0.8% to US$4,015.90 per ounce.
Bullion is set to record a weekly loss of nearly 4% and has dropped approximately 12% so far this month, reflecting persistent selling pressure as investors adjust their expectations for U.S. monetary policy.
Among other precious metals, silver fell 2.5% to US$56.44 per ounce, putting it on course for a weekly decline of around 13%. Platinum also dropped 1.8% to US$1,573.60 per ounce and is heading for its seventh consecutive weekly loss.
The U.S. dollar remained close to its highest level in 13 months and was on track for a second straight weekly gain, making gold more expensive for holders of other currencies and reducing global demand.
The greenback continued to draw support from expectations that the Federal Reserve may need to tighten monetary policy further as inflation remains elevated.
Data released on Thursday showed that the U.S. Personal Consumption Expenditures (PCE) Price Index—the Fed's preferred inflation gauge—rose 4.1% year-over-year in May, marking its highest reading in more than three years and the first time it has exceeded 4% since 2023.
According to the CME FedWatch Tool, financial markets are now pricing in a 63% probability of a Federal Reserve interest rate hike in September. Higher interest rates typically reduce the appeal of non-yielding assets such as gold.
XAU/USD Outlook
Despite the broader weakness, gold limited its losses as investors continued to monitor developments in the Middle East after a cargo ship reported an attack near the Strait of Hormuz, highlighting ongoing geopolitical risks despite an initial peace agreement between the United States and Iran.
The incident briefly boosted safe-haven demand for gold. However, the renewed geopolitical concerns were not enough to offset pressure from the stronger U.S. dollar and rising expectations of additional Federal Reserve rate hikes, leaving the precious metal on track for another weekly decline.