The dollar intensified as the U.S. Federal Reserve looked to tighten its monetary policy faster than expected, which partially offset the safe-haven demand from the continuing war in Ukraine.
Gold futures were falling 0.46% to $1,928.9 by 9:35 PM ET (1:35 AM GMT).
The dollar, which usually moves inversely to gold, framed up on Friday to a near two-year high and was also set for its best week in a month. The benchmark U.S. 10-year Treasury yield also struck a three-year high during the previous session.
The Fed’s hawkish tone in the minutes from its latest meeting also raised the dollar. On Thursday, St. Louis Fed President James Bullard added that he prefers wandering the policy rate to 3% to 3.25% in the second half of 2022. Nevertheless, Chicago Fed President Charles Evans and his Atlanta counterpart Raphael Bostic stated that they favor hiking rates to neutral while persisting in monitoring the economy.
Fed aggressively fights inflation
In the Asia Pacific, the Reserve Bank of India kept its interest rate constant at 4% as it handed down its policy decision earlier.
Gold, nevertheless, is being funded by the Ukraine war, rapid inflation, and the coronavirus epidemic. However, the Fed’s assertive stance to battle inflation, healing bond yields, the stronger dollar, and easing of epidemic restrictions on higher vaccination rates will put a lid on gold prices, Fitch Solutions stated in a note.
After it invaded Ukraine on Feb. 24, Russia described the “tragedy” of mounting troop losses and the economic hit from sanctions in the most somber assessment. Meanwhile, Ukrainians evacuated from eastern cities ahead of an expected significant offensive.
Silver dragged down 0.1% in other precious metals, platinum edged down 0.2%, and palladium climbed 1.4%. Both platinum and palladium were set for fifth straight weekly losses.