Market News

(Bloomberg) -- Gold was on track for a third weekly loss, as a hawkish Federal Reserve and rate-hike bets outweighed the signing of an interim peace deal between the US and Iran.

Bullion fell as much as 2.1% to around $4,122 an ounce on Friday. New Fed Chairman Kevin Warsh’s hawkish tone on Wednesday raised bets for a tightening of monetary policy this year, weighing on gold which doesn’t pay interest.

Meanwhile, commercial shipping began returning to the Strait of Hormuz after the US declared an end to its blockade, easing fears of prolonged energy shortages. However, concerns over inflation did not completely subside as it may take months, if not longer, for volumes of oil and liquefied natural gas going through the vital waterway to return to normal, according to analysts.

The reopening of the strait is positive for gold, but that’s offset by Fed tightening, said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “Historically, gold underperforms in the lead up to the first hike.”

“That said, it remains unclear if this is more of an insurance hike or the start of a hiking cycle. If it is not the start of another cycle, then there is a good chance gold may regain some glitter,” he added.

Gold fell 1.6% to $4,144.58 an ounce as of 2:25 p.m. Singapore time. Silver dropped 2.4% to $64.1235. Platinum and palladium declined. The Bloomberg Dollar Spot Index, a gauge of the dollar, was 0.1% higher, and was up 0.9% for the week.