Gold heads for weekly loss as stronger dollar, Fed rate outlook weighs

Business Recorder reported that gold on the spot market advanced 0.2% to $4,288.36 an ounce by 0200 GMT on Friday, yet remained 2% lower for the week. US gold futures were marginally firmer at $4,323.10. The metal was under pressure from a stronger dollar, which was heading for a weekly gain and making greenback-priced bullion costlier for holders of other currencies.

Rate expectations also weighed on the metal. Two Fed policymakers argued that inflation is running too high and that further increases could be necessary, following last week's quarter-point rise in the benchmark rate. Philadelphia Fed President Anna Paulson said restoring inflation to 2% was her top concern, while New York Fed President John Williams also signalled tighter policy ahead. Higher rates can reduce gold's appeal by making yield-bearing assets more attractive, even though the metal is traditionally viewed as a hedge against inflation.

Other precious metals were mixed. Silver on the spot market eased 0.1% to $63.81 an ounce, while platinum rose 0.5% to $1,756.90 and palladium fell 1.3% to $1,257.56. The three were all on course for weekly losses. Joshua Rotbart of J. Rotbart & Co. remained upbeat about gold through the end of the year, pointing to geopolitical tensions and rising sovereign debt as sources of steady safe-haven buying.