Hawkish Fed signals send gold to third weekly loss

Gold prices fell on Friday, putting the yellow metal on track for a third straight weekly decline, pressured by a firmer US dollar and a hawkish Federal Reserve, reports Reuters.

Spot gold was down 0.9% at $4,169.44 per ounce by 1306 GMT, after earlier hitting its lowest level since June 11 at $4,119.78. It has been trading below the 200-day moving average since June 5.

The US dollar was headed for a weekly gain, making greenback-priced metals less affordable for holders of other currencies.

"Gold faces a distinct risk of dropping deeper into bear market territory and below the $4,000/oz mark, as the precious metal continues to navigate a challenging environment," said Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.

"Higher-for-longer Fed expectations are toxic for non-yielding assets while benefiting the dollar," Tzabouras added.

Nine of the US central bank's 19 policymakers now think they will need to raise the Fed's policy rate this year, according to projections published on Wednesday, when the Fed's board decided to leave the rate in its current 3.50%-3.75% range.

Traders currently see a 70% chance of a Fed hike by September, according to the CME FedWatch Tool.

Gold's "trajectory will depend on developments in the US-Iran negotiations, next week's US inflation update and how markets price the Fed from here", said Tzabouras.

Adding to uncertainty on whether a lasting truce can be found, Switzerland said US talks with Iranian negotiators on a pact to end the Middle East conflict would not take place on Friday, as Vice President JD Vance dropped plans to travel to the European country.

Meanwhile, Israel and Hezbollah have agreed on a ceasefire set to begin at 1300 GMT on Friday, a senior US official told Reuters.

Goldman Sachs cut its gold price forecast to $4,900 per ounce by December, from a previous projection of $5,400. It added that its price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk.

Spot silver fell 1.1% to $65.11 per ounce, platinum eased 1.7% to $1,667.14, and palladium lost 1.9% to $1,254.69. All three metals headed for weekly losses.