Gold prices posted weekly losses of about 0.8 percent under pressure from U.S. Treasuries and dollar strength, while investors awaited U.S. inflation data next week for the timing of Federal Reserve interest rate cuts (U.S. Federal Reserve).
The US 10-year Treasury yield rose to its highest level in two weeks, and the two-year yield hit its highest level in nearly two months.
The dollar index continued to rise, snapping its longest streak of weekly gains in nearly 5 months, as market expectations of the Federal Reserve cutting interest rates eased, coinciding with a rise in bond yields.
The Fed is likely to keep interest rates high for a long time, which means most central banks will follow suit, said Everett Millman, senior market analyst at Gainesville, Queens.
He continued, “I think things are going downhill for the price of gold,” adding, “There is very strong support around $1,960, and I don't expect gold to go any lower.”
Earlier last week, several Fed officials, including Chairman Jerome Powell, said they wanted to see more evidence that inflation will continue to fall before cutting interest rates this week.
The monthly consumer price index in the US rose less than initial estimates in December, revised government data showed on Friday. Market traders are now awaiting the release of the US Consumer Price Index for January scheduled for Tuesday.
According to CME Fedwatch, traders now see a 61 percent chance of a rate cut in May.
Low interest rates reduce the opportunity cost of holding non-yielding bonds.
Spot gold was down 0.5 percent at $2,024 an ounce, and the yellow metal was down about 0.8 percent for the week.
After the settlement, gold futures for April delivery fell 0.45 percent to $2,038.7 an ounce.
Among other precious metals, palladium was down 2.5 percent at $865.07 an ounce, and platinum was down 1.6 percent at $870.97. Both metals posted losses for the second straight week.
On Thursday, the price of palladium, used in the automobile industry, fell below that of platinum for the first time since April 2018.
Silver rose 0.13 percent to $22.61 in spot trades, but suffered weekly losses.