Gold flat; set for biggest weekly dip in 10 after hawkish Fed plans

[BENGALURU] Gold was flat on Friday (Jan 28) and set for its sharpest weekly decline since November, as markets digested the US Federal Reserve's policy tightening plans that propelled the dollar index to a multi-month peak.

Spot gold was unchanged at US$1,796.41 per ounce by 1.09 am GMT. US gold futures was up 0.2 per cent at US$1,796.

The metal fell about 2 per cent for the week, it's worst fall since Nov 26.

The dollar index soared to highs last seen in July 2020 against other major currencies, after the Fed said on Wednesday it could deliver faster and larger interest rate hikes in the months ahead.

US economic growth accelerated in the fourth quarter to post its best performance in nearly 4 decades in 2021, the Commerce Department reported on Thursday.

Traders in the fed funds futures market moved to price in nearly 5 rate hikes this year in the wake of Powell's remarks on Wednesday, starting with the March meeting.

Futures have factored in about 30 basis points of tightening.

Interest rate hikes raise the opportunity cost of holding non-interest paying gold.

Gold prices will drift lower in 2022 and 2023, as central banks raise interest rates, lifting bond yields and making non-yielding bullion less attractive, a Reuters poll showed.

Swiss gold exports rose last year to their highest since 2018, as demand for bullion in China and India, the biggest consumer markets, recovered from a collapse early in the Covid-19 pandemic, Swiss customs data showed.

Spot silver shed 0.2 per cent to US$22.69 an ounce. Platinum was up 0.1 per cent to US$1,023.49 and palladium remained unchanged at US$2,375.18. REUTERS