Tough talk from Fed keeps lid on gold prices

Gold prices recorded a small weekly loss as US Federal Reserve officials reiterated that they were not ready to ease up on raising interest rates to fight inflation. The afternoon fixing on Friday in London was $1,751.60 an ounce, compared with $1,759.35 a week earlier. Thai selling prices were quoted at 29,800 baht per baht-weight (15.2 grammes), down 250 baht from the previous week.

The pullback could continue as December options expire this week, which could cause further consolidation in gold, said David Meger, director of metals trading at High Ridge Futures, adding that the market overall remains focused on Fed rate expectations.

More tough talk from the Fed strengthened the dollar, making gold more expensive for other currency holders.

While gold has shed 15% since its March peak after the Fed began raising rates, it has gained 7% since the beginning of November as markets started pricing in a slower pace of hikes.

“Gold had been able to hold its own relatively well so far … (yet) a correction was always likely after its big move upward,” said Fawad Razaqzada, an analyst at City Index.

In the physical market, dealers in India offered the biggest discounts in four months as a jump in domestic prices hit demand, while Chinese premiums fell sharply as buying slowed.

The depreciation of the rupee helped to drive Indian gold prices to 53,200 rupees per 10 grammes, the highest since April 19.

“Buyers are not willing to make purchases at the current price level. Many investors are selling gold and booking profits,” said Prithviraj Kothari, managing director of RiddiSiddhi Bullions.

Jewellers were not buying either as retail demand waned, said Harshad Ajmera of Kolkata-based JJ Gold House.

In China, premiums eased to $8-25 an ounce over benchmark spot prices, from $12-30 a week earlier.

Peter Fung, head of dealing at Wing Fung Precious Metals, said that on the retail side, people were mostly selling jewellery.