Gold prices hovered near two-year lows around $1,660 an ounce on Friday and were set to notch their fourth losing week in five, as a strong dollar and an impending interest rate hike from the Federal Reserve next week dampened bullion’s appeal. Solid US retail sales and jobless claims data on Thursday, along with a surprisingly hot CPI report earlier this week, cemented fears that the Fed may need to move even more aggressively to arrest surging prices. Gold also lost its shine as a safer-haven asset in times of heightened economic uncertainties, with the World Bank and IMF slashing growth forecasts for key economies, while major US companies issued weak guidance on dire economic outlooks. While gold is considered a hedge against inflation and economic uncertainties, higher interest rates raise the opportunity cost of holding non-yielding bullion, denting its appeal.
