IGI Logo

Gold prices edged lower on Friday as a stronger U.S. dollar and aggressive rate hikes by major central banks dented the metal's appeal, while a dip in Treasury yields limited the losses and kept bullion on track for its first weekly rise in six.

Spot gold was down 0.2% at $1,715.93 per ounce, as of 0738 GMT. Prices dropped to their lowest level in more than a year at $1,680.25 on Thursday before ending up 1.3%. Bullion has gained 0.5% so far this week.

U.S. gold futures rose 0.3% to $1,717.70 per ounce.

The dollar jumped 0.7% against its rivals, making greenback-priced bullion more expensive for buyers holding other currencies. [USD/]

"Gold is in a downtrend and the rallies that are setting in are short-lived because gold is being pressured by the fact that inflationary expectations are coming down," said Edward Meir, an analyst with ED&F Man Capital Markets.

The European Central Bank joined its global peers in the fight against soaring inflation as it raised interest rates by more than expected on Thursday, despite the euro zone economy suffering from the impact of Russia's war in Ukraine.

The U.S. Federal Reserve policy meeting is due next week where policymakers are expected to raise interest rates by 75 basis points.

"We are waiting to hear how hawkish will their (Fed) guidance be on rates. If they still think inflation is a problem they are going to still ram through more interest rate hikes, that's going to be very bearish for gold," Meir said.

Offering some respite, benchmark U.S. 10-year Treasury yields fell to a more than two-week low, reducing the opportunity cost of holding non-interest bearing gold. [US/]

Among other precious metals, spot silver fell 0.6% to $18.73 per ounce, while platinum gained 0.7% to $877.94, and palladium rose 0.2% to $1,897.02.