SINGAPORE — Gold is heading for the longest run of weekly losses this year courtesy of the Federal Reserve, which signalled in comments from policy makers and meeting minutes that US interest rates may rise as early as June.
Bullion for immediate delivery was little changed at $1,255.39 an ounce at 11.13am in Singapore, down for a third week, the longest losing streak since November, according to Bloomberg generic pricing. It sank to $1,243.90 on Thursday, the lowest since April 28, as a resurgent dollar hurt demand.
Gold's rally in 2016, which saw price s climb to a 15-month high, has been thrown into reverse as investors reassess the likelihood of higher US borrowing costs, which damp the appeal of bullion. Following the release of the April minutes that suggested increases were on the cards, New York Fed president William Dudley said on Thursday a June-July time frame for a hike was reasonable, while Richmond Fed President Jeffrey Lacker said there was a very strong case for a raise next month.
Stronger dollar
"Gold prices took the brunt of the selling," Australia & New Zealand Banking Group Ltd said in a note Friday, predicting the flows into bullion-backed exchange-traded products may be set to reverse. "Commodities were weaker across the board as the stronger dollar weighed on investor sentiment."
The odds of a rise in June or July are now at 28% and 47%, from 4% and 17% last Friday, according to Fed funds futures. The Bloomberg Dollar Spot Index is set for a third weekly gain as bullion has dropped 1.4% this week, the most since the period to March 25.
Holdings in gold-backed ETFs were at the highest level since December 2013 as of Thursday, when they expanded by 5.9 tonnes even as bullion fell for a second day, data compiled by Bloomberg show. The holdings have risen 25 percent this year, gaining every day apart from one since April 26.