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Gold futures end lower, suffer biggest weekly drop since March 2020



Gold futures end with a loss on Friday, with prices posting the biggest weekly drop since March 2020 as the U.S. dollar strengthened following a more hawkish tone from the Federal Reserve.

Prices spent part of the day trading higher, but St. Louis Federal Reserve President James Bullard said Friday he expects the central bank to raise its benchmark interest rate in 2022. That sent gold prices back toward session lows, said Edward Moya, senior market analyst at Oanda.

Overall, the Fed’s “hawkish tilt made the bond market scramble this week and that chaos has been supportive for the dollar, which was terrible news for bullion,” he said in a market update.

Gold and other commodities saw prices fall sharply on Thursday, as traders reacted to a Wednesday Fed meeting that saw policy makers pencil in two interest rate increases by the end of 2023 and begin discussing the eventual tapering of its monthly asset purchases.

The commodities selloff hit precious metals because “the lingering benefits of gold as an inflation hedge are diminished if the Fed isn’t going to let inflation rip,” said Marshall Gittler, head of investment research at  BDSwiss Group, in a note.

A surging U.S. dollar in the wake of the Fed shift is seen as a component of the commodity selloff. The greenback moved sharply higher Wednesday and Thursday after a Federal Reserve meeting. The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was up another 0.3% on Friday, bringing the index’s weekly gain to 1.8%.

Read: Why the U.S. dollar is soaring — and what’s next — after Fed’s change in tone

Gold for August delivery


fell $5.80, or 0.3%, to settle at $1,769 an ounce on Comex. July silver


edged up by 11 cents, or 0.4%, at $25.97 an ounce.

Gold saw a weekly loss of 5.9%, its largest since the week ended March 13, 2020, according to FactSet data, while silver marked a weekly decline of 7.7%.

The losses in gold futures following Wednesday’s Fed policy meeting sent prices below the 100-day and 200-day moving averages, and “a lot of buy stop losses were triggered” when those levels failed to hold, said Chintan Karnani, director of research at Insignia Consultants.

The precious metals market has also seen “quarter-end position squaring and rebuilding” following the Fed meeting, he told MarketWatch. Towards the end of every quarter, gold either “rises or crashes” and in the last two weeks of March this year, the gold price crashed, then recovered.

“I expect the gold price to form a medium-term bottom by the end of the month,” if it continues to fall until then, said Karnani.

In other Comex dealings, July copper

shed 0.5% to $4.16 a pound, ending over 8% lower for the week.

Read: Why copper’s drop from all-time highs may not mark the end of its run up in prices

July platinum

lost nearly 1.4% to $1,041 an ounce, with prices down about 9.6% for the week. September palladium

settled at $2,469.90 an ounce, down 1.7% for the session, logging a weekly loss of around 11%