Gold prices were set for a weekly drop on Friday as a stronger US dollar and fears of higher interest rates from the Federal Reserve weighed on demand for the non-yielding metal.
Spot gold was down 0.2% at $4,270.40 an ounce by 0035 GMT, leaving it more than 2% lower for the week. US Gold futures rose 0.2% to $4,304.80, Reuters reported.
The dollar was headed for a weekly gain, making gold more expensive for buyers holding other currencies, while US Treasury yields rose, too.
“Focus will definitely continue to be on the interest rate situation. When we start to see markets pricing in a much more hawkish Fed, it strengthens the dollar and is negative for gold,” said Kelvin Wong, senior market analyst at OANDA, according to Reuters.
Expectations that US interest rates could stay high after two Federal Reserve policymakers said additional increases may be needed to bring inflation under control. The comments come after a quarter-point hike last week.
Because investors are more motivated to hold yield-bearing assets, gold, which does not pay interest, tends to come under pressure when borrowing costs and bond yields rise.
Silver, platinum and palladium also headed for weekly falls, Reuters reported.
