Gold prices extended a push below the key $1,800 level on Friday, as the dollar climbed in a week that has helped solidify opinions among investors that the Federal Reserve is readying for an interest-rate hike in March.
February gold GCG22, -0.46% GC00, -0.46% dropped 0.4%, or $6.50, to $1,787 an ounce. Gold finished 2% lower to $1,793,10 on Thursday, a loss that marked its first settlement below $1,800 for a most-active contract since Jan. 10, and the weakest close since Jan. 6, according to Dow Jones Market Data. April gold GCJ22, -0.47% fell 0.3%, or $6, to $1,787.20 an ounce.
On a continuous basis, gold is down 2.6% for the week, which would mark its biggest decline since November 2021.
Meanwhile, silver for March delivery SIH22, -0.80% fell 0.6%, or 14 cents, to $22.54 an ounce, following a near 5% drop on Thursday. The precious metal is facing a near 7% drop for the week on a continuous contract basis, also the worst weekly drop since November 2021.
As gold fell, the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.18%, gained another 0.1% for a weekly gain of 1.8% so far. Priced in dollars, gold tends to move inversely to the U.S. currency as a higher dollar value makes purchases of the precious metal pricier for foreign investors.
Prospects for higher U.S. interest rates have been driving up the dollar. At a news conference following the Federal Open Market Committee meeting on Wednesday, Chairman Jerome Powell didn’t reject the idea of hiking interest rates at each of its meetings in 2022, and talked of the need to be “nimble.”
Worries about how fast and how many interest rates hikes will be seen this year, as the central bank battles high inflation, are among factors that have been roiling global financial markets this week, triggering big swings in equities.
Investors are waiting on the latest reading on the Fed’s preferred inflation gauge, the U.S. core PCE inflation index for December, which will be released at 8:30 a.m. Eastern Time Friday, along with real consumer spending and disposable incomes. The fourth-quarter employment cost index will be released at the same time. At 10 a.m. Eastern, investors will get the University of Michigan consumer sentiment index for January.
Some shine also came off gold as tensions between the West and Russia over a potential invasion by the latter into Ukraine appeared to ease somewhat. Russia’s foreign minister Sergey Lavrov said Friday that Moscow doesn’t intend to start a war, but also “would not let our interests be rudely trampled on and ignored.”
Among other metals, palladium’s most-active March contract PAH22, -3.06% dropped 2.7% to $2,301 an ounce, after marking the highest finish since September of $2,366.50 on Thursday. April platinum PLJ22, -2.58% fell 3%, or $29.60, to $991.30 an ounce. March copper HGH22, -1.55% fell 1.6% to $4.352 a pound.