Gold futures settled lower on Friday, with prices booking their sharpest weekly decline since November, following a decision by the Federal Reserve this week to raise benchmark interest rates for the first time since 2018.
The lackluster week for the precious metal comes as a new regime of higher U.S. and U.K. interest rates, bearish for bullion, commences with the Fed raising benchmark rates by a quarter percentage point to between 0.25% and 0.5% and laying out plans for ongoing increases in the policy rate, as widely expected.
Gold prices declined on the back of a rally in the U.S. dollar, as investors continued to digest the Federal Reserve’s “new hawkish stance,” said Edward Moya, senior markets analyst at OANDA.
Against that backdrop, the ICE U.S. Dollar Index DXY,
“The dollar will benefit from a rapidly improving interest rate differential and steady safe-haven flows, as investors grow worrisome over the war in Ukraine’s impact on inflation and ultimately growth,” Moya said in a market update.
Gold, meanwhile, “may have a choppy short-term road ahead, with the $1,900 level providing key support,” he said. “To the upside, gold might find tentative resistance at the $1,950 level.”
April gold GCJ22,
Read Nickel market tumult continues: What investors need to know
Carlo Alberto De Casa, external market analyst at Kinesis Money, said that “the evolution of the war between Russia and Ukraine and the next Fed’s decisions will be the main market drivers for the gold price.”
Despite the recent decline, De Casa said that many investors remain bullish on bullion.
“The appetite for bullion remains massive,” the analyst said.
The analyst sees the precious metal holding support at two levels: “the first one is the $1,920 area (which is where gold peaked in 2011), followed by the $1,900 threshold.”
Meanwhile, May silver SIK22,
May copper HGK22,
