(Bloomberg) -- Spot gold headed for a second weekly decline, with prices nearing their lowest mark since 2020, as the dollar remained strong and holdings in bullion-backed ETFs extended losses.
The Bloomberg Dollar Spot Index has been supported by hawkish comments from Federal Reserve officials. The yield on the 10-year Treasury climbed above 4.25% for the first time since 2008 as traders start to price in a higher peak Fed policy rate.
Outflows from gold-backed exchange-traded funds are accelerating, a bearish signal for bullion amid the outlook for tighter monetary policy. Holdings in the funds shrank by 12.5 tons on Wednesday, the biggest one-day decline since March 2021 and extending a plunge that’s endured for almost six months.
“Federal Reserve’s rate tightening going forward is weighing strongly on the markets and due to this negative undercurrent, the technical picture seems to be worsening for gold by the day,” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services. Prices are now inclined to break below the psychological $1,600 level and could even extend to as low as $1,555 in the coming weeks, he said.
Gold fell to an intraday low of $1,619.93 an ounce Friday before trading down 0.4% to $1,621.98 at 7:44 a.m. in London. A decline below $1,614.96 would mark the lowest since April 2020. Palladium, platinum, silver also dropped. The dollar index rose 0.2%.