Gold futures for December delivery GCZ5, -0.13% gave up $6, or 0.5%, to settle at $1,103.30 an ounce on Comex, for a weekly loss of 1.6%.
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A rate increase would tend to push the USA dollar higher but that could put pressure on the price of dollar-denominated commodities like gold, making it more expensive to buyers in other currencies.
Prices are down two percent this week, and touched their weakest level since August 11 at $1,099.05 an ounce on Wednesday.
Gold futures settled lower on Friday to tally a third straight week of losses as investors awaited the Federal Reserve’s key decision on rates next week.
Concerns over slowing growth in China, mixed economic data and volatility in financial markets have increased uncertainty about the timing of any rate increase, which had been expected as early as this month. This week, the number of job openings in the United States was at a 14 year high, which prompted a surge in the value of the dollar, increasing its strength against precious metals and lowering the value of gold.
“We have long argued that the first USA rate hike could potentially be a buying opportunity as it removes some of the uncertainty that has lingered over the market for the past three years“, Hansen said. “The market would be in better shape if the Fed said clearly next week what it was going to do”.
Investors will likely remain on edge until the monetary policy meeting next week has passed, as they are wary of holding the precious metal with the risks of earlier rate rises.
Bodily gold demand among the many main Asian shoppers was comparatively gentle. Gold closed out the week in a quiet fashion overnight in Asia, MKS said in a note, supported by modest Chinese demand but holding a tight range.
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The metal is facing its third consecutive weekly decline. Silver failed to extend its outperformance of gold, tracking the heavier metal’s sharp drop to hit sudden 2-week lows at $14.33 per ounce – midway between last Friday’s finish and the previous week’s new 6-year low at $14.00 per ounce.
