Gold heads for worst week in over a year after fed blow

Gold prices held steady on Monday after data showed U.S. inflation subsided, bolstering hopes that the Federal Reserve will start cutting interest rates this year. Carla Gottgens | Bloomberg

| Getty Images Gold struggled for traction in choppy trading on Friday en route to its worst week in over a year as the dollar extended its rally on the back of the U.S. Federal

Reserve's hawkish outlook. Spot gold edged 0.17% lower to $1,770.36 per ounce around 3:00 p.m. ET, stalling an initial uptick on some bargain buying. U.S. gold futures settled 0.3% down

at $1,769.90 an ounce. Palladium was last down 1.94% at $2,462.18, while silver fell 0.23% to $25.86 and platinum dropped 1.94% to $1,037.53. The Fed said on Wednesday it would consider

whether to taper its asset purchases in every subsequent meeting and brought forward projections for interest rate hikes into 2023. Bullion was further hurt by St. Louis Fed President James

Bullard's statement that inflation was stronger than anticipated and faster tightening of monetary policy was a "natural" response to it. "Markets are fearful of further

Fed jawboning," said David Meger, director of metals trading at High Ridge Futures. It remains to be seen "how much Fed talk we're going to get on potentially reducing asset

purchases and raising interest rates at some point down the road, if these forecasts ring true," Meger added. The dollar index was headed for its best week in nearly nine months,

denting gold's allure for other currency holders. But some analysts, including from Goldman Sachs and Commerzbank, said gold could be set for a recovery. There may be more near-term

selling pressure in gold but at some point bargain hunters could step in, sensing a buying opportunity given that rising inflation has been historically "bullish" for precious 

metals, said Kitco Metals senior analyst Jim Wyckoff. Commerzbank also kept its $2,000 an ounce year-end forecast unchanged.