Pressure from the Dollar and Interest Rates in the Gold Market

Although gold rose on Friday, a stronger dollar and expectations that the U.S. Federal Reserve will keep interest rates elevated for an extended period have put pressure on the precious metal. The spot gold price rose 0.2% to $4,288.36 per ounce. Despite this, gold is down about 2% on a weekly basis. U.S. gold futures rose 0.6% to $4,323.10. The dollar’s expected weekly gain has made gold more expensive for investors using other currencies. Higher U.S. Treasury yields have also weighed on gold prices.

Market participants are closely monitoring the Federal Reserve’s interest rate policy. Higher interest rates are expected to reduce demand for non-yielding assets such as gold. Gold is considered a hedge against inflation, but persistently high rates may weaken this advantage. Geopolitical tensions and rising government debt could support demand for safe-haven assets. Among other precious metals, silver fell 0.1% to $63.81, while platinum rose 0.5% to $1,756.90. Palladium declined 1.3% to $1,257.56. All three metals are set to end the week with losses.