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Gold Futures Settle Lower On Rate Hike Fears

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Gold prices edged lower on Friday amid fears of aggressive monetary tightening by the Federal Reserve. However, with rising inflation, and tensions due to the ongoing war in Ukraine boosting its safe-haven appeal, the yellow metal posted a weekly gain.

Higher Treasury yields weighed on gold. Bond yields stayed firm at multi-year highs amid rising prospects of some sharper interest rate hikes.

A somewhat subdued dollar limited gold’s downside.

Gold futures for April ended down by $8.00 or about 0.4% at $1,954.20 an ounce. Gold futures gained 1.3% in the week.

Silver futures for May drifted down $0.305 to settle at $25.615 an ounce, while Copper futures for May settled at $4.6985 per pound, down $0.0440 from the previous close.

Chicago Fed President Charles Evans said Thursday he’s “comfortable” with raising rates in quarter-point increments, while being “open” to a 50 basis-point move if needed.

Evans expects six more 25 basis point increases in the central bank’s policy interest rate by the end of the year and three more next year, putting the Fed funds rate in a range of 2.75- 3 percent by the end of 2023.

In economic news today, a report released by the National Association of Realtors showed an unexpected drop in pending home sales in February.

NAR said its pending home sales index tumbled by 4.1% to 104.9 in February after plunging by 5.8% to a revised 109.4 in January. The continued decrease came as a surprise to economists, who had expected the index to rebound by 1%.

Meanwhile, revised data released by the University of Michigan showed consumer sentiment in the U.S. fell by more than initially estimated in the month of March. The report showed the consumer sentiment index for March was downwardly revised to 59.4 from the preliminary reading of 59.7. Economists had expected the index to be unrevised.

With the unexpected downward revision, the consumer sentiment was at its lowest level since hitting 55.8 in August of 2011.

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