Gold prices stuck to near key levels on Friday, outpacing the dollar for a third straight week as signs of a less hawkish Fed and turmoil in the banking sector saw traders turn to the yellow metal as their preferred safe haven.
Bullion prices were also set for a fourth straight week of gains, if current levels hold, as the dollar tumbled to a seven-week low against a basket of currencies.
Renewed weakness in the dollar comes after the Fed hiked interest rates earlier this week, but hinted that peak rates may be in sight, as a recent banking crisis highlighted the growing economic impact of high borrowing costs.
Spot gold was flat at $1,993.60 an ounce, while gold futures steadied at $1,995.65 an ounce by 20:27 ET (00:27 GMT). Spot gold was up about 0.2% this week, while gold futures were set to add 1%. The yellow metal was now less than $100 away from a $2074.88 an ounce record high hit during the 2020 COVID pandemic.
The collapse of several regional U.S. banks saw investors pile into gold over the past three weeks, amid concerns of contagion. While regulators intervened to restore faith in the banking system, markets still remained on edge over any more ructions.
The Fed’s softening of its hawkish stance also brewed concerns over a banking collapse, even as Treasury Secretary Janet Yellen sought to reassure investors of stability in the sector.
Markets are now pricing in the possibility that the Fed will raise rates only once more this year, after hiking rates by a cumulative 475 basis points in the past 12 months.
A pause in the Fed’s hiking cycle bodes well for gold, which was pressured by strength in the dollar and rising yields through 2022.
Uncertainty over an economic slowdown this year also benefited the yellow metal. Other precious metals were muted on Friday, but were also set for a strong week. Platinum futures were set to add 1.4% this week, while silver was up 3.7%.
Among industrial metals, copper prices were muted on Friday, but were also set for strong weekly gains as pressure from the dollar eased.
Copper futures rose 0.1% to $4.1060 a pound, and were up 5.6% this week.