Yields rose on the back of inflation data, while also providing further support to dollar strength, which has been a barrier for gold.
Gold prices fell to an eight-week low on Friday, driven by a stronger dollar and bond yields, as the market braced for stronger Federal Reserve rate hikes. United States (Fed) in the coming months.
A series of factors are exerting pressure on gold prices such as data related to inflation in the US heating up, international stocks on fire, the dollar increasing, US bond interest rates going up, causing gold prices to plummet.
U.S. inflation picked up while consumer spending edged up 1.8 percent in January, well above a forecast for a 1.3 percent increase from Reuters, further reinforcing expectations that the Fed will maintain its stance. Eagle.
Ending Friday's session, the spot gold contract fell 0.62% to $1,811.30 an ounce, Gold Futures lost 0.48% to $1,818.10 an ounce.
Yields rose on the back of inflation data, while also providing further support to dollar strength, which has been a barrier for gold.
Putting pressure on gold, the dollar index hovered near a 2-month high, while US government bond yields were also on track to record a fifth weekly gain.
After a flurry of strong economic data, investors have eased expectations for a deep rate cut this year and expect US interest rates to peak at 5.35% in July and remain above levels. 5% until the end of the year.
Rising interest rates reduce gold's appeal because they increase the opportunity cost of holding a non-yielding asset. After the minutes of the February meeting, the US recently released a report showing that the country witnessed solid growth in the final months of 2022. The fourth quarter gross domestic product report showed that the economy grew 2. 7%. The slightly hotter-than-expected data quickly pushed US bond yields around 4.6%, near their highest levels since 2007. Thereby providing fresh upside momentum for the US bond market. dollar, with the US Dollar Index holding around 104 points. Currency analysts at Standard Chartered see gold as likely to be oversold even with a potential drop to $1,780 an ounce. Standard Chartered expects bond yields and the dollar to enter a consolidation phase and ease some headwinds for gold.