Gold continues to slide as Fed turns up heat

Gold prices posted their third straight weekly decline amid prospects of aggressive interest-rate increases from the US Federal Reserve. The afternoon fixing on Friday in London was $1,882.35 an ounce, compared with $1,911.30 a week earlier. Thai selling prices were quoted at 30,600 baht per baht-weight (15.2 grammes), down 250 baht from the previous week.

Benchmark US Treasury yields strengthened, with strongerthan-expected US jobs data released on Friday also helping to build the case for bigger interest-rate hikes.

“Gold traders basically saw the non-farm payroll report as another confirmation the Fed is going to remain on cruise control with delivering rate increases over the next couple of policy meetings,” said Edward Moya, a senior analyst with the currency brokerage Oanda.

Gold has benefited from safe-haven demand in light of events in Ukraine, pushing above $2,000 at one point. And while gold is seen as an inflation hedge, higher US interest rates lift the opportunity cost of holding non-yielding bullion.

In the physical market, dealers in India were charging premiums as a price dip helped drive demand, while Covidinduced curbs kept a lid on activity in top consumer China.

Indian dealers charged premiums of up to $3 an ounce over official domestic prices versus discounts of $8 a week earlier.

“Retail buying has significantly improved. Buyers were waiting for a price correction, which happened just before the Akshaya Tritiya festival,” said Amit Modak, CEO of the jeweller PN Gadgil and Sons.

Many consumers buy coins and bars for investment purposes during the festival, Modak said, adding the wedding season could help demand if prices hold at current levels.

The Chinese market continued to see discounts of $10 per ounce from global benchmark spot rates.

Gold could see some safe-haven demand once China comes out of lockdown, “especially when one looks at losses being made in real estate”, said analyst Ross Norman.