Gold heads for weekly fall as Fed officials strike hawkish tone
Gold prices rose on Friday but a more hawkish stance of U.S. Federal Reserve officials on stimulus tapering and interest rate rises put the metal on course for a third straight weekly drop.
Spot gold rose 0.2% to $1,772.41 per ounce by 0439 GMT, after hitting its lowest in nearly a month on Thursday. U.S. gold futures gained 0.6% to $1,773.30.
The metal has declined 1.1% so far in the week as a number of Fed officials suggested the central bank might accelerate stimulus tapering, with Chairman Jerome Powell saying that decision could be reached in its upcoming policy meeting.
U.S. Federal Reserve Bank of Atlanta President Raphael Bostic told the Reuters Next conference on Thursday that it would be appropriate to end the central bank’s bond-buying program by the end of March, allowing the Fed to raise rates.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding non-interest bearing gold.
“We got the Fed that is more hawkish and an environment where if anything hits the fan, especially with the new variant, traders will likely buy into the dollar. That is a negative environment for gold,” said IG Markets analyst Kyle Rodda.
The Omicron coronavirus variant has sparked fears over the pace of the economic recovery, pushing stocks lower and putting oil prices on track for a sixth consecutive weekly drop.
Investors’ focus now turns to the U.S. nonfarm payroll report due at 1330 GMT.
“If there are signs that jobs growth is strong and wage growth is still picking up, that adds impetus to calls that the Fed will have to increase the pace of tapering, weighing on gold,” Rodda said.
Spot silver rose 0.1% to $22.40 an ounce. Platinum gained 0.3% to $939.78, while palladium fell 0.2% to $1,778.77.
· U.S. Senate passes bill to avert government shutdown, sends to Biden for signature
The Democratic-controlled U.S. Senate on Thursday passed a bill to fund the government through mid-February, averting the risk of a shutdown after overcoming a bid by some Republicans to delay the vote in a protest against vaccine mandates.
The 69-28 vote leaves government funding at current levels through Feb. 18, and gives Democratic President Joe Biden plenty of time to sign the measure before funding was set to run out at midnight on Friday.
· Omicron marches on as Biden prepares U.S. for grim winter
· Malaysia detects first omicron case in quarantined traveler from South Africa
· WHO urges Asia-Pacific to ready for omicron-driven surge in infections
· China is a better short-term bet than India, says Jefferies
China is a better short-term bet than India for investors who are looking at Asian markets excluding Japan, according to Christopher Wood, global head of equity strategy at Jefferies.
· Goldman Sachs: inflation in Asia will be higher next year, but no sharp acceleration
Andrew Tilton of Goldman Sachs explains why Asia’s inflation is unlikely to rise sharply next year that would force central banks to tighten monetary policies aggressively.
· Oil up on OPEC+ plan to meet ahead of schedule if omicron variant dents demand
Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the omicron variant hits demand, but prices were still on course for a sixth week of declines.
U.S. West Texas Intermediate (WTI) crude futures rose 27 cents, or 0.4%, to $66.77 a barrel at 0122 GMT, adding to a 1.4% gain on Thursday.
Brent crude futures rose 12 cents, or 0.2%, to $69.79 a barrel, after climbing 1.2% in the previous session.
The market has been roiled all week by the emergence of Omicron and speculation that it could spark new lockdowns, dent fuel demand and spur OPEC+ to put its output increases on hold.
Brent was poised to end the week down about 4%, while WTI was on track for a 2% drop on the week, both down for a sixth straight week.
Reference: CNBC, Reuters
Thai
Eng