Gold soars, but heads to record largest weekly loss for more than 5 months

Gold prices rose during trading today, Friday, but they are still on their way to the largest weekly loss in more than 5 months, amid declining expectations of an interest rate cut by the US Federal Reserve, after the release of the minutes of the bank’s latest meetings.

According to CNBC, gold futures rose by about 0.2% to $2,340.1 per ounce, after hitting its highest level ever on Monday when it traded near $2,450 levels.

Traders’ bets showed growing doubts that the Federal Reserve will cut interest rates more than once this year.

Ilya Spivak, head of global macroeconomics at Tasty Live, said that the monetary tightening tone contained in the Fed’s monetary policy minutes in May indicates the inability of policymakers to cut interest rates with confidence, which led to a rise in Treasury yields and the dollar, and metals appear to be affected by this.

Gold is a means to hedge against inflation, but high interest rates increase the opportunity cost of owning the precious metal, which does not generate a return.

Although the current policy is to “maintain” the interest rate at its current level, the minutes of the meeting released on Wednesday also revealed discussions about the possibility of raising it further.