Gold prices firm, but set for third weekly fall on Fed rate hike prospects

Gold prices firm, but set for third weekly fall on Fed rate hike prospects

Gold prices were on track for a third straight weekly decline on Friday as investors fretted over the prospects of aggressive rate hikes from the U.S. central bank, though slight pullback in dollar helped the precious metal to tick higher on the day.

Spot gold rose 0.2% to $1,881.17 per ounce by 917 GMT, but was down 0.8% for the week. U.S. gold futures were up 0.4% to $1,883.30.

The dollar index eased 0.3% after hitting a fresh 20-year high, making gold less expensive for those holding other currencies.

However, the U.S. currency was headed for fifth weekly gain, while the benchmark U.S. Treasury yields held near the key 3% level.

As long as there are uncertainties about global growth and inflation there could be phases where gold prices will gain because equities are likely to stay under pressure, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

The base case, though, is that the bullion is likely to be under pressure, Barot said. European stocks headed for their worst week in two months as investors expect bigger interest rate hikes will be needed to rein in inflation. While gold is perceived as an inflation hedge, higher U.S. interest rates lift