Gold Rises but Heads for Third Weekly Loss in a Row

SadaNews Economy - Gold prices rose during trading on Friday, March 20, but are heading for a third consecutive weekly loss, amid a strong dollar and the Federal Reserve's inclination towards tightening monetary policy.

In trading terms, gold futures increased by about 2.4% to $4714.2 per ounce, while the spot price of the yellow metal rose by 1.4%, reaching $4715.27 per ounce.

Additionally, the spot price of silver increased by 1% to $73.6 per ounce.

Gold is heading toward weekly losses of about 6%, as the spot price of the yellow metal has declined by more than 10% since the start of the U.S.-Israeli attacks on Iran on February 28.

Conversely, the dollar has emerged as one of the clear winners as a safe haven, rising by more than 2% so far this month.

Most central banks in major developed markets kept interest rates unchanged this week, but indicated their readiness for further tightening if the inflation shock caused by energy prices continues.

The closure of the Strait of Hormuz continues to drive up crude oil prices, exacerbating inflationary pressures by increasing transportation and manufacturing costs. Typically, rising inflation boosts gold's appeal as a hedge; however, rising interest rates curtail demand for yield-free assets.

Gold is considered a hedge against inflation, but rising interest rates exert pressure on it as they make yield-bearing assets more attractive, while a strong dollar makes gold more expensive for holders of other currencies.