Speculative moves continue in the third week. A speculation of Fed rate hike after the recent US economic data resulted in a drastic fall in Bullions and Base metals last week. On the other side, Crude oil plunged and the dollar hit a six week high against its major counterparts.
Since the updated data on inflation emerged, Federal Reserve officials have been girding for an extended period of high interest rates, including a return to a 50-basis point hike in March, saying creeping inflation makes the 25-basis point quantum that the central bank agreed on this month untenable.
Gold futures posted their third weekly losses. However, after hitting a multi-week low, it recovered slightly before closing. Yellow metals saw drastic fall amid calls by Federal Reserve officials for sharper rate hikes as U.S. inflation proved stickier than thought.
Gold and other Precious Metals seem to have hit the “pain train” as economic data continues to support an aggressive Fed policy stance leading to a stronger U.S. Dollar and rising Treasury Yields. While the Fed may want to keep its hawkishness in the near future, it also weighed on sentiment.
The U.S. dollar surged to a six-week high in early European trade Friday, after strong U.S. economic data and hawkish comments from Federal Reserve policymakers pointed to more interest rate hikes..
MCX GOLD settled at 56257, down -0.85%, Comex GOLD Future settled at $1841.73, down 1.26%, while SILVER future settled at $21.689, down 1.29%.
MCX Crude oil posted 4.50% fall. Brent and WPI down 4%
Base metals remained somewhat negative. MCX Aluminum down 2.37% and Lead down 1.14, while ZINC and Copper recovered slightly.