Gold heads for weekly fall on bets for bigger rate hikes

Gold heads for weekly fall on bets for bigger rate hikes

Gold prices edged up on a weaker dollar on Friday, but prospects of aggressive rate hikes from the U.S. Federal Reserve put bullion on course for a third consecutive weekly decline. Spot gold rose 0.3% to $1,883.11 per ounce by 10:40 a.m. ET (1440 GMT), but was down 0.7% for the week. U.S. gold futures rose 0.5% to $1,885.20.

The dollar index slipped 0.3% after hitting a 20-year high, making gold less expensive for overseas buyers. But capping bullion's upside, benchmark U.S. Treasury yield strengthened near the key 3% level, with stronger-than-expected U.S. jobs data perceived as building 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 point rate increases over these next couple of policy meetings," said Edward Moya, a senior analyst with OANDA.

The bond market sell-off would also continue to weigh on gold, Moya added. The Fed on Wednesday raised its benchmark rate by half a percentage point, the most in 22 years, although Chairman Jerome Powell explicitly ruled out raising rates by three-quarters of a percentage point in a coming meeting. While gold is perceived as an inflation hedge,