Gold set for weekly fall as central banks step up inflation battle
Gold edged lower on Friday and was on course for its biggest weekly fall since mid-November as several central banks this week signalled that more rate hikes are needed to curb inflationary pressures.
Spot gold eased 0.1% to $1,775.50 per ounce, as of 0940 GMT. It was down about 1% for the week, having hit a one-week low in the previous session.
U.S. gold futures were up 0.1% at $1,789.00.
Gold prices have reacted to the big spike in bond yields in Europe as a result of the hawkish messaging from the European Central Bank, said Michael Hewson, chief markets analyst at CMC Markets.
"People are still recovering from the big loss of yesterday (in gold prices)."
The European Central Bank on Thursday raised its key interest rates by half a percentage point and indicated that more hikes were likely, a move similar to ones by the U.S. Federal Reserve and the Bank of England.
The Fed had on Wednesday raised interest rates by 50 basis points as expected, but Fed Chair Jerome Powell said the U.S. central bank will deliver more interest rate hikes next year, despite growing recession worries.
Although gold is considered a hedge against higher inflation and a safe store of value in times of uncertainty, higher rates raise the opportunity cost of holding non-yielding bullion.
Meanwhile, India raised the base import prices of gold and silver late on Thursday. India is the world's biggest importer of silver and the second-biggest consumer of gold.
Spot silver fell 2% to $22.60 per ounce, and was down about 3.8% so far for the week.
Platinum lost 1.5% to $991.59. Palladium edged 0.1% lower at $1,790.36 after falling more than 8% in the previous session, and was headed for its biggest weekly drop in two months.
