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Gold Down Amid Big Interest Rate Hike Expectations

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By Zhang Mengying

Investing.com – Gold was down on Friday morning in Asia, set for its second straight decline, with worries of big interest rate hikes from the U.S. Federal Reserve weighing on bullion demand.

Gold futures were down 0.21% to $1,825.95 by 12:01 AM ET (0401 AM GMT).

Fed Chair Jerome Powell reiterated that the central bank’s inflation fight is "unconditional" on Thursday, while Fed Governor Michelle Bowman said she supports another 75-basis points interest rate hike in July, followed by a few more half-point hikes.

U.S. 10-year Treasury yields firmed on Friday, denting demand for gold.

“The U.S. dollar remains firm, and expectations now lean towards a 75-basis-points Fed hike in July. The TIPS spread – a market-based proxy for inflation expectations – is also near a 4-month low, and these have kept a lid on any gold rally,” City Index senior market analyst Matt Simpson told Reuters.

“Gold looks vulnerable over the near-term, given its inability to break $1,850, its 200-day average, this week,” Simpson said, adding “were it not for the fear of a global recession then gold would likely be lower than it already is.”

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.81% to 1,063.07 tons on Thursday from 1,071.77 tons a day earlier.

In other precious metals, silver fell 0.24%. Platinum jumped 1.00% while palladium gained 1.53%.

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