Title: Gold Up, But Set for Worst Month in Seven Over Fed Concerns

Apr 29, 2022 01:22AM ET

By: AnalysisWatch

Gold prices rose Friday morning in Asia as worrisome U.S. GDP data drove some investors into the safe haven. However, the yellow metal faces its biggest monthly decline since September 2021 as the U.S. Federal Reserve is widely expected to aggressively raise interest rates when it makes its decision next week.

Gold futures were up 0.87% at $1,907.70 an ounce by 1:16 AM ET (5:16 AM GMT), but are down about 2% so far in April 2022.

A U.S. GDP that contracted 1.4% in the first quarter of 2022 could ease pressure on the Federal Reserve (Fed) to tighten monetary policy as aggressively as it has hinted, rhetoric that has pressured gold prices in recent weeks, DailyFX currency strategist Ilya Spivak told Reuters.

"This has given gold a bit of a lifeline and set the dollar back a bit. However, I don't expect these moves to continue, "Spivak added.

Fed policymakers agree that they want to accelerate the pace of rate hikes in 2022. However, they have yet to reach a consensus on how fast the pace should be to avoid an economic recession.

Gold prices, however, were on the verge of their biggest monthly decline since September 2021, as both the dollar and 10-year U.S. Treasury bond yields have risen so far in April. The dollar, which typically moves inversely to gold, was down on Friday but recovered from a 20-year high it hit against rival currencies in the previous session.

The freight train, also known as the U.S. dollar, is going to have to slow down at some point. And that could be positive for gold when it does, "Matt Simpson, senior market analyst at City Index, said in a note.

Among other precious metals, silver gained 0.1% and palladium 0.5%, while platinum fell 0.5%. Monthly declines were expected for all three metals.