Gold, Platinum and Palladium Fall on Fundamentals

KEY POINTS:

• Gold fell 1.9% this week
• Palladium expected to have its worst week in 11 months
• Platinum: Worst week since June 2021

Gold fell on Friday and is likely to fall further amid cooling demand for safe-haven assets and hawkish signals from Federal Reserve Chairman Powell.

Meanwhile, autocatalytic palladium extended its decline on track for its worst week in more than 15 months, hit by excess inventories amid wider adoption of electric vehicles while automakers switch to cheaper platinum.

Investor appetite for gold has weakened due to easing concerns about tensions in the Middle East spilling over into the wider region and hawkish comments from Jerome Powell. Prices started Friday on a shaky note and could move closer to $1,945 if the dollar continues to rise.

Gold has lost more than $50 since hitting $2,000 levels last week as tensions escalate in the Middle East. Prices are down 2.1% this week.

Undermining market expectations for a peak in U.S. interest rates, Fed officials including Powell said on Thursday they were still not confident rates are high enough to end the battle against inflation.

Following Powell's comments, the benchmark 10-year U.S. Treasury yield (10Y) rose, making non-yielding bullion less attractive to investors.

The Dollar Index (DXY) was on course for its biggest weekly gain in more than three months, making gold more expensive for overseas buyers.

“Any reversal of monetary policy by the US central bank, coupled with peace-loving statements, could raise prices. Geopolitical tensions could be another bullish catalyst,” said Carlo Alberto De Casa, market analyst at Kinesis Money.

Platinum fell 1.3% to $848.95, marking its worst week since mid-2021.

Palladium fell 4.5% to $947.51 an ounce. Both metals are used by automakers in devices to reduce engine emissions.