Gold flat as firm dollar, U.S. rate hike dent appeal

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Gold products are on display in front of a jewellery store at a shopping area in Elazig, Turkiye. Gold prices were flat on Friday as the dollar held close to its recent peak while the likelihood of more aggressive interest rate hikes by the U.S. Federal Reserve also weighed on the appeal for non-yielding bullion.
Berkcan Zengin | Universal Images Group | Getty Images

Gold prices were flat on Friday as the dollar held close to its recent peak while the likelihood of more aggressive interest rate hikes by the U.S. Federal Reserve also weighed on the appeal for non-yielding bullion.

Fundamentals

Spot gold was flat at $1,671.60 per ounce by 0107 GMT. U.S. gold futures ticked 0.1% higher to $1,682.80.

The dollar index was down 0.1%, but not far from a 20-year peak scaled on Thursday in the wake of a 75-basis-point rate hike by the U.S. central bank and its hawkish outlook.

Rising rates dull bullion's appeal since it yields no interest. Gold prices have fallen nearly 20% since scaling above the key $2,000 per ounce mark in March.

Many central banks raised their interest rates this week, following the U.S. Federal Reserve in the fight against inflation, which has been sending shockwaves through financial markets and the economy.

Euro zone inflation is set to go higher and price growth likely to be more persistent than earlier thought, European Central Bank board member Isabel Schnabel said on Thursday, defending the ECB's plans to raise rates further.

The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labor market remains tight despite the Fed's attempt to cool demand with aggressive rate hikes.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.21% to 950.13 tons on Thursday from 952.16 tons on Wednesday.

Spot silver was flat at $19.64 per ounce, platinum rose 0.3% to $903.22, while palladium dipped 0.2% to $2,165.10.