Gold hovers near 3-month low, set for biggest weekly drop since February

Gold hovered near a three month low on Friday and was set for its biggest weekly drop since February, as the dollar strengthened after U.S. Federal Reserve Chief Jerome Powell hinted about more interest rate hikes.

Spot gold ticked up 0.2% to $1,917.63 per ounce but stayed close to a three-month low hit earlier in the session. Prices are down 2% for the week. U.S. gold futures rose 0.2% to $1,927.90.

The dollar index drew support from risk aversion globally, making bullion less attractive for overseas investors.

“Gold has extended lower out of the range that it was occupying for a few weeks, suggesting there is more weakness ahead. The decline matches up with the rise in yields, reflecting hawkish comments from Powell and Fed officials more generally,” said Ilya Spivak, head of global macro at Tastylive.

Powell in his second day of testimony said the U.S. central bank would move interest rates at a “careful pace” from here as policymakers edge towards a stopping point for their historic round of monetary policy tightening.

While gold is struggling to find any impetus amid the higher interest rate outlook, it has shown an ability to stage a recovery after recent price dips, said Tim Waterer, chief market analyst at KCM Trade.

U.S. jobless claims, meanwhile, held steady at a 20-month high last week, potentially signaling a softening labor market in the face of the Fed’s aggressive rate hikes.