FX.co ★ Gold Heads for Third Weekly Fall as Hawkish Fed Boosts Dollar

Gold fell to $4,150 per ounce on Friday, its lowest level since June 11, and was on track for a third straight weekly decline, as a stronger US dollar and rising expectations of tighter monetary policy weighed on demand. The dollar rose to a one-year high after the Federal Reserve left interest rates unchanged but signaled a more hawkish stance. Nine of the Fed’s 19 policymakers now project at least one rate hike before year-end, while futures markets currently price in roughly a 70% chance of an increase by September.

Expectations that interest rates will stay higher for longer typically pressure non-yielding assets such as gold while lending support to the dollar. Geopolitical risks also remained in focus after Switzerland announced that planned US-Iran talks aimed at resolving the Middle East conflict would not take place on Friday. Adding to the bearish tone, Goldman Sachs cut its year-end gold price forecast to $4,900 per ounce from a previous estimate of $5,400.