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Gold futures fell sharply on Friday in the sharpest single-session decline since mid-April, surpassing the metal’s first weekly loss in five weeks, following hawkish comments from Federal Reserve Chairman Jerome Powell.
In remarks during an International Monetary Fund panel Thursday, Powell said Fed officials were not yet confident that interest rates are high enough to bring inflation back to the 2% target over time, which surprised markets.
Gold prices are also under pressure from a decline in safe-haven sentiment as fears that tensions in the Middle East will spill over to wider regions have eased, with the metal’s downward trend likely to continue for some time.
Comex gold (XAUUSD:CUR) for the month of November for delivery ended the week -2.9%including a 1.6% thrashing on Friday to $1,932.60/oz as silver settled in November (XAGUSD:CUR) -4.2% on the week, including a 2.7% loss on Friday, to $22,215/oz.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SCHOOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (SLVP)
“Gold will continue to trade sideways to the downside in the near term unless we see an escalation in geopolitical events, a weak US economic report or the Fed suggests it is done raising rates,” Kitco said analyst Jim Wyckoff.
But gold could hit a record high of $2,100/oz next year, supported by Fed rate cuts, Capital Economics said in a report this week.
Ten-year Treasury yields should fall due to looser monetary policy and the dollar is likely to weaken due to rate cuts, which should also benefit gold, Capital Economics said.