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Hawkish Fed Tone Hampers Gold Price




  • Gold Price Lower for the Week as Fed Strategy Changes
  • Omicron Focus Moves to NFP Numbers
  • Other Precious Metals also Dip 

Gold prices have moved lower this week, closing in on the third weekly decline in a row. This comes amid turbulent markets not only in commodities but around the entire economy as the latest COVID-19 Omicron variant puts the economic recovery to date under pressure. The Fed has taken this opportunity to tighten its previous strategy which also closes some avenues for traders expecting a soft approach. Positive NFP numbers later today could provide further opportunities for the hawks to push for interest rate increases and an end to bond buying. 

Third Straight Weekly Loss Likely for Gold

The price of gold throughout the pandemic has been consistent and the precious metal has generally performed well in its role as a safe haven during that time. It now finds itself close to its one-month low which was hit on Thursday with much of the responsibility there due to the change in Fed outlook. 

A previously very supportive Jerome Powell and Federal Reserve had seen gains all around, including for gold and precious metals. Prices are up slightly in early Friday trading with Gold now above $1770 per ounce but still staring at a third consecutive weekly decline. This is largely due to a much more hawkish outlook and likely the end of the bond-buying program, and sooner rather than later interest rate hikes. All of these things are likely to increase the Treasury yields, which is negative for gold. 

Jobs Data Could Lead to Further Drop

In commodities news, much of the focus of the week has been on the latest Omicron variant and its spread around the world. This has helped plunge many markets, and though it remains the key story of the week, attention for precious metals traders is likely to be more on NFP numbers to come later today. 

A very positive number here in the afternoon will only strengthen calls for less support from the Fed and potentially hurry up any interest rate increases or other measures. With all of these having an undesirable impact on gold, such numbers would likely send prices lower. 

Gold Not Alone in Struggles

Gold has not been alone in undergoing a torrid time in recent weeks. Moving into Friday, silver, platinum, and palladium are all at lower points. This is in response to many of the same pressures felt across the market, but also due to uncertainty around industrial demand in many cases. This uncertainty has been heightened by the emergence of the new variant. 

At the same time, the virus impact has been really felt strongly by oil. Prices here are sharply down for the week as OPEC+ surprisingly kept their plans to increase production in January. They remained open to a quick policy change if needed, but both crude and WTI oil are facing a sixth consecutive losing week.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.