Powell’s hawkish remarks push gold lower, palladium slumps

By Ashitha Shivaprasad

(Reuters) – Gold fell more than 1% on Friday and was headed for a second straight weekly decline as safe-haven demand eased while the hawkish stance from Federal Reserve Chair Jerome Powell added to the downside.

Palladium tumbled to five-year lows below $1,000 an ounce, hastening a retreat triggered by expectations of surpluses due to the rapid spread of electric vehicles and automakers choosing cheaper platinum for their autocatalysts.

Spot gold dipped 1.1% to $1,936.09 per ounce by 2:38 p.m. ET (1938 GMT) and was down 2.8% in its worst week in six. U.S. gold futures settled down 1.6% at $1,937.70.

Silver fell 1.8% to $22.21.

“A hawkish Powell is the main reason for gold’s weakness this week. It is also undermined by investor risk appetite improving over the last few weeks,” said Fawad Razaqzada, market analyst at City Index.

Bullion has lost around $70 since hitting levels above $2,000 last week on escalating tensions in the Middle East.

U.S. Federal Reserve officials, including Powell, said on Thursday they are still not sure that interest rates are high enough to finish the battle with inflation.

Benchmark 10-year U.S. Treasury yield and the dollar index headed for weekly gains, making non-yielding gold less attractive for investors. [US/] [USD/]

“Gold will continue to trade sideways to lower in the near term unless we see an escalation in geopolitical events, weak U.S. economic report or if the Fed suggests it is done raising rates,” said Jim Wyckoff, senior analyst at Kitco Metals.

A major festival boosted demand for physical gold in India, but purchases were reported to be slightly lower compared with last year as higher prices put off some customers. [GOL/AS]

Platinum shed 2% to $842.34, on track for its worst week since mid-2021. Palladium slipped 2.8% to $964.25.

Both metals are used by car makers in devices to reduce engine emissions.

(Reporting by Ashitha Shivaprasad and Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid and Shilpi Majumdar)