Fed chief pokes gold with hawkish comments on interest rates via Alborsanews

The dollar and Treasury yields were hit by a second straight week of losses after the US Federal Reserve chairman’s statements on monetary tightening.

Federal Reserve officials, including Chairman Jerome Powell, on Thursday said they were still not confident that interest rates would be high enough to end the war on inflation.

This has shaken market expectations that US interest rates will peak.

After Powell’s comments, US 10-year yields rose from their lowest levels in more than a month, making the yellow metal, which does not generate income, less attractive to investors.

Instead of earlier expectations of a cut in May, traders are now looking ahead to the US Federal Reserve’s first possible interest rate cut in June next year.

Higher interest also increases the opportunity cost of holding.

– which measures the US dollar’s performance against a basket of six major currencies – settled at 105.86 points, registering weekly gains of around 0.8%.

Data from the University of Michigan showed the consumer confidence index fell 5% to 60.4 points in the initial reading for November, while long-term inflation expectations rose to 3.2%, the highest ever, from 3% last month. Studying since 2011.

The “Fed Watch” tool showed investors’ willingness to keep the Federal Reserve unchanged at its next meeting in December at 90.9%, up from 95.2% a week earlier.

Gold was down about 0.9% at $1,940.20 an ounce in spot trading, a weekly loss of about 2.6%, or $66 an ounce.

In two weeks, the yellow metal suffered losses of around 3.4%.

After the settlement, U.S. gold futures were down 1.6% at $1,937.70. Registering weekly losses of 3.1%.

Fouad Razakzada, market analyst at CitiIndex, said “the hawkishness on Powell’s latest statements is the main reason for gold’s weakness this week.”

“This could be undermined by the improvement in investors’ appetite for risk over the past few weeks.”

It fell to its lowest level in five years, below $1,000 an ounce, and its decline was accelerated by the rapid spread of electric cars and automakers’ choice to use cheaper platinum in the production of vehicles.

Platinum fell 1.94% to $845.83, its worst week since mid-2021. Palladium fell 3.3% to $961.77.

Automakers use both metals in their vehicles to reduce engine emissions.