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Gold Heads for Its Biggest Weekly Loss in More Than a Y...

Business Maverick

Business Maverick

Gold Heads for Its Biggest Weekly Loss in More Than a Year

A gold bar on display in a shop window in the Gold Souk in the Deira district of Dubai, United Arab Emirates, on Wednesday, Feb. 10, 2021. While silver’s jump to an eight-year high on Feb. 1 benefited many long-standing bulls on Wall Street, shop owners thousands of miles away in Dubai’s Gold Souk were far less euphoric. Photographer: Christopher Pike/Bloomberg
By Bloomberg
18 Jun 2021 0

Gold headed for the biggest weekly loss in 15 months as the Federal Reserve’s hawkish tilt sent the dollar surging.

Officials signalled monetary policy tightening could start earlier than expected, with Chair Jerome Powell saying that the central bank would begin a discussion about scaling back bond purchases used to support financial markets and the economy during the pandemic.

The surprisingly hawkish Fed shift of bringing forward the start of rate hikes puts it on course to formally announce tapering at their September gathering and begin to slow its $120 billion in monthly bond buying in November, according to economists at Barclays Plc.

Gold heads for biggest weekly drop since March 2020

“The taper tantrum trade is hitting gold the hardest right now and could last a couple more sessions,” said Edward Moya, a senior market analyst at Oanda Corp. “Gold looks like a falling knife but eventually the longer-term prospects will attract buyers. Long-term bets on gold could start to emerge closer to the $1,750 level, but some might wait and see if one last thrust lower eyes the $1,675 level. ”

While the Fed sped up their expected pace of policy tightening, Powell cautioned that discussions about raising interest rates would be “highly premature.”

Spot gold rose 0.3% to $1,778.09 an ounce at 8:52 a.m. in Singapore, after tumbling to $1,767.34 on Thursday, the lowest since May 3. Prices are down 5.3% this week, the most since March 2020. Silver, palladium and platinum all advanced. The Bloomberg Dollar Spot Index slipped 0.1% to pare this week’s gain to 1.5%.

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