Gold poised for second week of declines on hawkish Powell remarks

Nov 10  – Gold prices dropped on Friday and were on track for a second consecutive week of declines, weighed by a stronger US dollar and Treasury yields after hawkish remarks from Federal Reserve Chair Jerome Powell.

Spot gold fell 0.2% to USD 1,954.60 per ounce by 0758 GMT after hitting its lowest since Oct. 18 on Thursday. US gold futures fell 0.5% to USD 1,959.70.

Gold has slid 1.9% so far this week, on track for the biggest weekly decline in more than a month.

“Gold has been consolidating below USD 2,000 since the beginning of November, after getting ahead of itself. However, I remain bullish for the year-end as long as it stays above USD 1,900,” said Hugo Pascal, a precious metals trader at InProved.

Denting market expectations of a peak in U.S. interest rates, Fed officials, including Powell, said on Thursday they still aren’t sure that rates are high enough to finish the battle with inflation.

Following Powell’s comments, the benchmark 10-year US Treasury yield rose from more than one-month lows, making non-yielding bullion less attractive for investors.

Traders pushed out bets on the Fed’s first rate cut to June of next year, from May earlier. Higher rates raise the opportunity cost of holding gold, which yields no interest.

Meanwhile, the dollar index was heading for its biggest weekly gain in over three months, making gold more expensive for holders of other currencies.

“On the technical front, USD 1,940 looks very important support level for gold. If we break that, we’re looking at another test at USD 1,900,” said Ilya Spivak, head of global macro at Tastylive.

Palladium slipped 1.7% to USD 975.19 per ounce, its lowest since 2018, and was set for its worst week in 11 months.

Platinum fell 0.2% to USD 857.58 and was headed for its worst week since mid-June, 2021. Silver fell 0.1% to USD 22.61.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Rashmi Aich, Varun H K, Eileen Soreng and Savio D’Souza)