Gold loses its luster for the second year

Gold prices stabilized on Friday, but were set to incur a loss for the second year in a row, as the Federal Reserve’s hike in interest rates severely weakened the attractiveness of non-yielding bullion.

Spot gold rose 0.2 percent to $1,818.19 an ounce at 0540 GMT. US gold futures fell 0.1% to $1,824.30.

Gold is heading for an annual decline of 0.5 percent, as the dollar was the safe haven of choice amid huge interest rate hikes. The dollar index had its best annual performance since 2015, making gold too expensive for holders of other currencies.

However, gold prices have risen nearly $200 from their lowest level in more than two years, recorded in September, and are on track to achieve their best quarterly performance since June 2020, in hopes that the US central bank will slow the pace of raising interest rates.

The bank raised interest rates by 50 basis points in December, after four consecutive increases of 75 basis points each time.

Higher interest rates increase the opportunity cost of holding non-yielding gold.

As for other precious metals, the price of silver in the spot market rose 0.5 percent to $23.99, platinum increased 0.9 percent to $1063.63, while palladium fell 0.4 percent to $1807.53.

Silver and platinum are heading for an annual rise, while palladium is heading for an annual loss of more than four percent.