Gold prices edged higher on Friday but were set for a weekly loss as expectations of a US interest rate hike next month dampened demand for the non-yielding metal. Spot gold rose 0.3% to $1,855.20 per ounce, but was down 1.5% for the week. US gold futures also gained 0.3% to $1,857.10.
Rate Hike Expectations Weigh
The Federal Reserve's hawkish stance has strengthened the case for a rate increase in June, with traders pricing in a 70% chance of a 25-basis-point hike. Higher interest rates increase the opportunity cost of holding gold, which yields no interest.
Dollar and Yields Rise
The US dollar index hovered near a two-month high, making gold more expensive for other currency holders. Meanwhile, the benchmark 10-year Treasury yield climbed to its highest level in over two months, further pressuring gold.
Analysts noted that gold's safe-haven appeal has been undermined by the prospect of tighter monetary policy. However, some support came from geopolitical tensions and economic uncertainty. Investors are now awaiting the US non-farm payrolls data due next week for further clues on the Fed's policy path.
- Spot gold: $1,855.20/oz, up 0.3%
- Weekly loss: 1.5%
- Rate hike probability: 70% for June
