Gold remained steady last week but held near a 10-1/2 month low due to the higher dollar after the US Federal Reserve this week signalled rates could be raised three times next year — one more than forecast at its September meeting.
Spot gold was up 0.4 percent at $1,133.26 an ounce at 1225 GMT.
The metal hit $1,122.35 on Thursday, its weakest since Feb. 2 and is down more than two percent so far this week, leaving it on track for its sixth consecutive weekly loss.
US gold futures climbed 0.5 percent to $1,135.6 an ounce.
“The rate hike from the US Federal Reserve and the hawkish outlook for next year leave a fairly negative picture for gold,” ING commodity strategist Warren Patterson said.
The dollar held near 14-year highs against the euro and a broader basket of currencies as markets repositioned for a more hawkish US central bank.
Higher interest rates next year could propel the US currency higher, making gold more expensive for non-US firms.
“The nature of recent gold selling implies fresh shorting as well as liquidation,” HSBC analyst James Steel said in a note.
“The selling may not yet be exhausted … The bearish factors for gold — namely a high US dollar, rising yields and equities and risk-on investor demand appetite — leave bullion clearly on the defensive.” Highlighting investors’ lack of appetite for gold are physically backed gold exchange traded funds; holdings of the SPDR Gold Trust, the world’s largest gold ETF are down more than 10 percent since Nov. 9.
Silver gained 0.8 percent at $16.09 an ounce, after falling more than 5 percent on Thursday. Platinum rose 0.6 percent to $898.50 after dropping to the lowest since early February in the previous session.
Palladium was down 1.3 percent to $691.00 from an earlier $685.22, its lowest since the middle of November.
It is on track to end the week down more than five percent.
“We would refrain from buying (platinum or palladium) at this point in time,” Julius Baer analyst Carsten Menke said in a note.
“We have become more cautious on the demand backdrop, primarily related to autocatalysts and jewelry. Second, we note an unusually strong co-movement with gold. Third, we see an increasing risk of investor selling.”—Reuters