By Gina Lee
Investing.com – Gold was down on Friday morning in Asia but was trading within a tight range. The dollar strengthened as the U.S. Federal Reserve looks to tighten its monetary policy quicker than expected, which partially offset the safe-haven demand from the ongoing war in Ukraine.
Gold futures were down 0.46% to $1,928.9 by 9:35 PM ET (1:35 AM GMT).
"Gold has held up relatively well this week given the move higher by both U.S. yields and the U.S. dollar, we may be seeing some underlying haven and inflation hedging buying supporting the downside," OANDA senior analyst Jeffrey Halley told Reuters.
The dollar, which normally moves inversely to gold, edged up on Friday to a near two-year high and was also set for its best week in a month. The benchmark U.S. 10-year Treasury yield also hit a three-year high during the previous session.
The Fed’s hawkish tone in the minutes from its latest meeting also gave the greenback a boost. St. Louis Fed President James Bullard added on Thursday that he prefers hiking the policy rate to 3% to 3.25% in the second half of 2022. However, Chicago Fed President Charles Evans and his Atlanta counterpart Raphael Bostic said that they favor hiking rates to neutral while continuing to monitor the economy.
In Asia Pacific, the Reserve Bank of India kept its interest rate steady at 4% as it handed down its policy decision earlier in the day.
Gold, however, is being supported by the Ukraine war, rapid inflation, and the COVID-19 pandemic. However, the Fed's aggressive stance to combat inflation, recovering bond yields, the stronger dollar, and easing of pandemic restrictions on higher vaccination rates will put a lid on gold prices, Fitch Solutions said in a note.
In the most somber assessment since its invasion of Ukraine on Feb. 24, Russia described the "tragedy" of mounting troop losses and the economic hit from sanctions. Meanwhile, Ukrainians evacuated from eastern cities ahead of an anticipated major offensive.
In other precious metals, silver inched down 0.1% and platinum edged down 0.2%, while palladium rose 1.4%. Both platinum and palladium were set for fifth consecutive weekly losses.