Gold hit 3-week low on strong dollar, rate hike fears

Gold prices hit a three-week low on Friday, as the dollar’s rise and expectations of a US Federal Reserve interest rate hike dented the yellow metal’s attractiveness.

By 0451 GMT, spot gold prices declined 3% to $1,752.89 an ounce, after falling to its lowest since July 28^th at $1,751.01 earlier in the session. During the week, the precious metal fell 2.7%, and is heading to record the first weekly decline in five weeks.

US gold futures also fell 0.3% to trade at $1,766.20 per ounce, Reuters reported.

The dollar rose to a one-month high against rival currencies, making gold more expensive for buyers of other currencies.

Meanwhile, several US Federal Reserve officials said Thursday that the central bank needs to continue increasing borrowing costs to control high inflation.

Gold is strongly affected by the rise in US interest rates, which leads to an increase in the opportunity cost of acquiring the yellow metal that does not generate returns.

Among other precious metals, spot silver fell 0.9% to $19.35 an ounce and is heading to record the largest weekly percentage decline since late January.