Gold is Heading For The Worst Week in 15 Months Due to The US Federal Reserve’s Tendency to Tighten Monetary

Gold prices rose on Friday, June 18, but are heading towards recording the worst weekly performance since March 2020 after the US Federal Reserve’s shift towards a monetary tightening tone caused the dollar to rise and negatively affected the attractiveness of the yellow metal.

And gold rose in spot transactions 0.5% to $ 1781.96 an ounce, but it was down 5% for the week. US gold futures gained 0.5% to $1,782.70.

The US Federal Reserve indicated that it will consider reducing its asset purchase program at each meeting it holds, and has brought forward expectations of the first post-pandemic interest rate increases to 2023.

After the monetary tightening comments from the Federal Reserve, the dollar jumped to a two-month high and is heading for its best week in nearly nine months.

Although gold is seen as a hedge against inflation, higher interest rates will reduce its attractiveness as it means that the opportunity cost of holding it will increase.

As for other precious metals, palladium gained 1.9% to $ 2543.61 an ounce, but it is heading towards the worst week since late March, after a sharp decline recorded on Thursday.

Silver rose 0.7% to $26.09 an ounce, but it is down more than 6% for the week. And platinum rose 0.6% to $ 1064.77.