Gold Set For Weekly Decline as Fed Hints at Sooner Than Planned Rate Hikes

Gold Set For Weekly Decline; Early on Friday, gold is trading somewhat bullish; reversing its steep losses from the previous session; supported by a weakness in the US dollar; although, gains remain limited as investors cautiously await developments on the Fed’s plans to ease monetary stimulus soon. At the time of writing. GOLD is trading at a little above $1,754.

The rise in the precious metal came on the back of the greenback sliding to a one-month low on Thursday; helping make the commodity more affordable for holders of other currencies; Despite the current rise in price; gold is set to post a weekly decline of around 0.4% so far this week.

Gold Set

Gold’s safe haven appeal received a slight support from the latest weekly jobless claims report revealing an uptick in the number of Americans filing fresh unemployment claims over the past week. However; the improvement in risk appetite among investors kept gains in check as investors moved back towards equities. and other riskier instruments as the Evergrande crisis abated.

One of the main factors keeping the yellow metal trading under pressure is the Fed chairman Jerome Powell’s recent statements about ending the tapering process by mid-2022 as long as US’s economic recovery continues at a strong pace. The latest Fed policy meeting held earlier this week saw policymakers hint at considering a rate hike sooner than previously anticipated; A rate hike increases investor confidence in the US economy and weakens the safe haven appeal of gold and is keeping a lid on its recent gains as a result.

While the economic calendar for the day is fairly light, we could see some volatility in the commodity during the European session on the release of German Ifo business climate; Later in the day, the new home sales data from the US could also drive some price action in gold.