Market News

(Bloomberg) -- Gold headed for a second weekly decline after a slew of central banks followed the Federal Reserve in raising interest rates to cool inflation.

Bullion slipped lower on Friday as the dollar climbed to a record. The precious metal had swung between gains and losses Thursday, dropping as much as 1.1% after Japan intervened in the foreign exchange market to strengthen its currency, causing bond yields to climb and the dollar to slide before later recovering.

Weakness in bullion is “very likely to persist” due to “monetary tightening that makes gold costlier to hold,” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services. “However, recession fears and any escalation in the Russia and Ukraine conflict could support prices.”

Central banks in Switzerland, Norway and Britain followed the Fed’s lead in announcing interest-rate hikes to curb price increases. The non-interest bearing metal, which is priced in the US currency, usually has a negative correlation with the dollar and rates.

Outflows from exchange-traded funds have continued, with holdings now close to the lowest this year. US purchasing managers index data due later Friday will provide a further indication of how the economy is coping with higher interest rates.

Spot gold declined 0.9% to $1,656.17 an ounce by 11:13 a.m. in London, heading for a weekly loss. The Bloomberg Dollar Spot Index climbed 0.7% to a record high. Silver, platinum and palladium all fell.