Commodity Market: Gold set for first loss in three weeks as markets weigh hawkish Fed hints

Spot Gold edged higher on Friday, but looked set to register its first loss in the past three weeks, pressured by Fed hints that policy tightening is still far from over.

The US Dollar was set to register its best week since early October, bouncing off recent lows, supported by a slew of hawkish comments from Federal Reserve officials and robust US retail sales data that dampened hopes for a pause in hikes.

Markets are now pricing in an 87% chance that the Federal Reserve will slow the pace of rate hikes to 50 basis points at its upcoming policy meeting on December 14th, following four consecutive 75 basis point rate increases.

According to Fitch Solutions, on one hand, the yellow metal is still underpinned by rising risks of global recession and developments regarding the military conflict in Ukraine.

But, on the other hand, “growing optimism towards the Chinese economy, still high risks of the Fed raising rates further and more aggressively than the market expects, and a peaking of inflation in Q3 will continue to pressure gold.”

As of 9:27 GMT on Friday Spot Gold was edging up 0.23% to trade at $1,764.69 per troy ounce. Earlier in the week, the precious metal went up as high as $1,786.54 per troy ounce, which has been its strongest price level since August 15th ($1,802.37 per troy ounce).

Gold has retreated 0.41% so far this week, following a 5.38% surge in the previous week.

Gold futures for delivery in December were edging up 0.26% on the day to trade at $1,767.50 per troy ounce, while Silver futures for delivery in December were up 1.30% to trade at $21.247 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging down 0.25% to 106.423 on Friday. Earlier this week, the DXY slipped as low as 105.340, which has been its weakest level since August 12th (105.087).