Gold prices inched higher on Friday but were set for their first weekly decline in three as rising inflation fueled bets of quicker interest rate hikes and dented bullion’s appeal.
Spot gold rose 0.2% to $1,861.43 U.S. per ounce overnight Friday, but was down 0.1% so far in the week. U.S. gold futures also gained 0.2% to $1,864.00.
U.S. Federal Reserve policymakers are penciling in the possibility of earlier interest rate hikes than they thought would be needed just a few months ago, as inflation continues to soar and the economy picks up speed.
Higher interest rates raise the non-interest bearing metal’s opportunity cost, reducing bullion’s appeal.
The prospect of earlier interest rate hikes also helped the dollar rise, further reducing gold’s appeal by raising the metal’s cost to buyers holding other currencies.
Spot silver rose 0.4% to $24.88 U.S. per ounce but was on track for its first weekly fall in three.
Platinum rose 0.95% to $1,058.05 U.S. and palladium gained 0.5% to $2,143.66 U.S..
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