Gold prices calmed down on Friday. However, US Federal Reserve officials’ tougher stance on stimulus cuts and interest rate hikes has kept gold, seen as a hedge against inflation, on its way down for the third week in a row.
Gold prices down slightly: What’s next?
Spot gold slid to $1,767 after hitting a nearly one-month low on Thursday. The precious metal has slumped after a number of Fed officials suggested the central bank could step up stimulus cuts and Cryptocoin. com
As we reported , the Fed has dropped 1.4 percent so far this week after Chairman Jerome Powell said a decision could be taken at the upcoming policy meeting.
IG Markets analyst Kyle Rodda said: “We see the Fed exhibiting tougher monetary policy and there is an environment where traders will likely buy dollars in any case, especially with the new variant. “This is a negative environment for gold,” he said. The Omicron coronavirus variant weighed on risk sentiment, fueling fears about the pace of the economic recovery.
Investors’ focus has now turned to the US nonfarm payroll employment report. “If there are signs that job growth is strong and wage growth is still recovering, that adds momentum to calls that the Fed should increase the tapering pace by putting pressure on gold,” Rodda said. “While faster monetary policy tightening and the strength of the dollar pose risks to gold, inflation is likely to continue to rise through 2022 and this should support gold over the medium term,” said Sugandha Sachdeva, Religare vice president of commodity and currency research.
