Gold is forecast for biggest weekly drop since late November

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  • Gold on its way to the first of every four weekly plunge
  • US non-farm wage data due at 1:30 p.m. GMT
  • 10-year US Treasury yields at their highest since March 2021

Jan. 7 (Reuters) – Gold stabilized on Friday, with US employment data due later today, even as the metal was forecast for its biggest weekly drop since late November, weighed down by firmer bond yields as traders braced for earlier-than-anticipated rate hikes by the US Federal Reserve.

Spot gold was little changed at $ 1,789.00 an ounce at 07:57 GMT after falling for two consecutive sessions, putting it on track for a weekly decline of around 2.1%.

US gold futures were little changed at $ 1,788.10.

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“Markets are increasingly valuing an aggressive Fed… the whole prospect of the Fed trying to control spike in inflation is obviously raising yields,” said Kyle Rodda, analyst at IG Markets.

Traders anticipate a more than 70% chance of a rate hike of at least 25 basis points at the March Fed meeting, according to the CME FedWatch Tool, as even the most accommodating U.S. central bankers felt the need to tighten their policy this year. Read more

Benchmark 10-year US Treasury yields have stabilized near their highest level since March 2021. Higher yields increase the opportunity cost of holding gold.

Bullion is considered a hedge against inflation, but the metal is very sensitive to rising US interest rates, which increases the opportunity cost of holding unproductive bullion.

Investors will focus on the report on non-farm wages in the United States, due at 1:30 p.m. GMT.

“A number above 550/600,000 will strengthen the faster narrowing of the Fed narrative and weigh on gold. A number below 250,000 will alleviate these concerns and provide some support for gold,” said Jeffrey Halley , senior market analyst at OANDA.

Spot silver fell 0.5% to $ 22.04 an ounce, platinum fell 0.4% to $ 960.38 and palladium fell 0.3% to $ 1,868.25 .

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Reporting by Asha Sistla in Bangalore; edited by Shounak Dasgupta and Jason Neely

Our standards: Thomson Reuters Trust Principles.


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