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Gold futures edged higher Friday, but remained on track for the biggest weekly drop since March 2020 as the U.S. dollar jumps following a more hawkish tone from the Federal Reserve.
Gold for August delivery
GC00,
GCQ21,
edged up $3.30, or 0.2%, to $1,778.10 an ounce on Comex. July silver
SI00,
SIN21,
was up 21.9 cents, or 0.8%, at $26.075 an ounce. Gold was on track for a weekly loss of more than 5%, which would be its largest since March 2020, according to FactSet, while silver headed for a weekly decline of more than 7%.
Gold and other commodities fell sharply on Thursday, as traders reacted to a Wednesday Federal Reserve meeting that saw policy makers pencil in two interest rate increases by the end of 2023 and begin discussing the eventual tapering of its monthly asset purchases.
The commodities selloff hit precious metals as well because “the lingering benefits of gold as an inflation hedge are diminished if the Fed isn’t going to let inflation rip,” said Marshall Gittler, head of investment research at BDSwiss Holding Ltd., in a note.
A surging U.S. dollarin the wake of the Fed shift is seen as a component of the commodity selloff. The greenback moved sharply higher Wednesday and Thursday after a Federal Reserve meeting. The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, was up another 0.3% on Friday, bringing the index’s weekly gain to 1.8%.
Read: Why the U.S. dollar is soaring — and what’s next — after Fed’s change in tone
