Gold goes weak for this week

Gold has witnessed a decline in the current week thanks to the strengthening dollar. Gold prices fell on Wednesday and Thursday as the dollar traded higher.

The U.S. dollar was performing strong against major rivals on Wednesday, a bullish reflection of upbeat economic outlooks from Federal Reserve Chairman Jerome Powell and the central bank’s Beige Book report.

Gold prices dropped on Thursday as the dollar remained near a three-week high. U.S. Federal Reserve Chairman Jerome Powell’s comments this week implied increasing interest rates and continued to put pressure on the precious metal prices.

Gold prices sank as hawkish comments from Fed Chair Jerome Powell pushed the US Dollar higher (as expected), undermining the appeal of non-interest-bearing and anti-fiat assets. He argued that despite recent worries about trade tensions, the economy remains in good shape and the best path forward continues to be a gradual increase in interest rates.

Powell reiterated the likelihood for gradual interest-rate tightening, suggesting the Fed was on track to raise rates twice more before the end of 2018.

The fall in gold prices came as the dollar held firm against its peers following bullish comments from Powell. The U.S. Dollar Index remained unchanged at 94.84 on Thursday after hitting a three-week high of 95.407 the previous day

On the U.S. data front, housing starts in June dropped by 12.3% from numbers in May, which were also revised lower, and were 3% lower than year-ago levels.

Meanwhile, the pound also weakened against the greenback, late Tuesday in New York. The pound’s slide comes amid signs that inflationary pressures in the U.K. are easing, which make the Bank of England may think twice about raising its key rate by 25 basis points, as is still expected by market participants.

U.K. consumer prices rose 2.4%, unchanged from May and missing expectations of a 2.6% reading. Core inflation slipped to 1.9%, falling below the Bank of England’s 2% target.

Seeing the bigger picture, we can say that the Fed is confident enough of the dollar getting stronger in light of a positive economic growth. And this may result in interest rates hike which will further make the dollar more attractive relatively to other currencies.

A negative environment awaits for gold

Gold prices fell Friday to their lowest settlement in nearly a year, with the precious metal failing to find safe-haven support from the U.S.-China trade dispute, as the U.S. dollar gained for the week.
old prices were muted on Friday, stuck in a tight trading range, as the dollar extended rally from the previous session when strong U.S. inflation data and trade war concerns boosted demand for the greenback.

Gold prices fell again versus a rising Dollar on Friday in London, heading for a 1.3% weekly drop at new 2018 lows beneath $1240 per ounce as the US currency pushed higher on the FX markets amid President Donald Trump's ongoing tour of Europe.

The dollar was upbeat near a 10-day peak versus a basket of currencies on Friday, supported by Treasury yields that edged higher on expectations the U.S. inflation rate will rise.     

U.S. consumer price data on Thursday showed a steady build-up of inflation that could keep the Federal Reserve on a path of gradual interest rate increases.                 

Spot gold was down 0.1 percent at $1,245.54 an ounce during Fridays trading hours. For the week, the metal was down 0.7 percent.

Lately, the dollar has been very influential and one of the most prime mover for gold prices.
A stronger dollar—which has drawn haven demand amid the clash over trade between the U.S. and China and pushed higher on rising-rate expectations—has been the most significant headwind for gold. A strengthening greenback can make commodities linked to the monetary unit, such as gold, more expensive to buyers using other currencies

Market sentiments have been largely positive on the greenback as investors turned around from the safe haven asset despite rising geopolitical risks.

Currently, there is a lot of uncertainty prevailing in the markers as far the trade was is concerned.

The United States and China could reopen talks on trade but only if Beijing is willing to make significant changes.

If this uncertainty continues and there is any sort of escalation in the crisis then we might see the yellow metal gaining its luster.

During times of uncertainty gold prices can receive a boost as the metal is widely considered a safe-haven asset but bullion has failed to benefit from recent trade disputes.
   
But this is not the end of it.  Right now even the inflation numbers are not helping gold. This is because inflation numbers support higher interest rates and this will create negative impact on gold. Gold, which is seen as a traditional hedge against price pressures, has shown little interest in the latest inflation data, which hit their highest level in six years

Furthermore, The Federal Reserve’s hawkish tightening cycle, a strong economy, and a higher U.S. dollar will steal all of the market’s attention this year as the trade war tensions pause, pressuring gold prices even further. All of these clubbed together, can create a significantly negative atmosphere for gold.