Gold prices drop as U.S interest rate rises

Gold prices inched lower on Friday and were headed for the first weekly decline in three weeks as expectations of higher U.S. interest rates and easing political tensions on the Korean Peninsula and Syria weighed on demand for the safe-haven metal.

Spot gold was down 0.1 percent at $1,344.10 an ounce at 0650 GMT, while U.S. gold futures fell 0.2 percent to $1,346.30 per ounce. Spot gold fell 0.2 percent on the week.

We don’t see much fresh buying interest and there is some profit taking. The physical demand is also very weak.

The market is not able break above $1,355, which is acting as a good resistance and causing some long liquidations, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Prices have been stuck in the $1,320-$1,360 range for a good time .The upside is also limited due to the fear of interest rates.

Market jitters over Western missile strikes in Syria that provided some support to gold earlier in the week eased, while the geopolitical outlook on the Korean Peninsula brightened as U.S. President Donald Trump said on Wednesday he hoped a summit with North Korean leader Kim Jong Un would be successful.

Investors were also relieved that no new U.S. demands on trade came out of a summit between Japanese Prime Minister Shinzo Abe and Trump.

The uncertainty over geopolitical risk and trade war tension has moved to the back burner this week and has made for a less compelling argument in the gold market, said Stephen Innes, APAC trading head at OANDA.

Traders are rehashing old topics amidst reasons to stay long into the weekend, but drawing few if any conclusions.

Also, the relatively optimistic backdrop in the United States should support the Federal Reserve in raising interest rates at least twice more this year, traders and analysts have said.

Meanwhile, Bank of England Governor Mark Carney on Thursday acknowledged the recent mixed domestic economic readings, which reinforced the view the BOE would raise rates gradual over the next few years.

Among other precious metals, spot silver was down 0.2 percent at $17.18, after hitting over 2-1/2-month high at $17.35 in the previous session.

Platinum rose 0.2 percent to $934.40. It touched an over three-week high at $953.50 in the previous session.

Source: Voice of Nigeria