Gold heads for worst week in 9 months after Fed blow

GOLD - JAKARTA. Gold struggled for direction in choppy trading on Friday en route to its worst week in nine months as the dollar resumed its rally while investors took stock of the U.S. Federal Reserve's hawkish outlook.

Spot gold edged 0.2% down to $1,770.60 per ounce by 10:28 a.m. EDT (1428 GMT), stalling an initial uptick on some bargain buying. Prices were down 4.5% for the week, having slid over 2% on Thursday.

U.S. gold futures fell 0.1% to $1,774.00.

Palladium was poised for its biggest weekly fall since March 2020, while silver was down 6.9% for the week.

Palladium was last up 0.3% at $2,529.66 per ounce, while silver was little changed at $25.93 and platinum dropped 0.6% to $1,052.18.

The Fed on Wednesday said it would consider whether to taper its asset purchase programme in every subsequent meeting and brought forward projections for interest rate hikes into 2023.

Traders also digested St. Louis Fed President James Bullard's comments that faster monetary tightening was a "natural" response to faster than expected economic growth and inflation.

"Markets are fearful of further Fed jawboning," said David Meger, director of metals trading at High Ridge Futures.

It remains to be seen "how much Fed talk we're going to get on potentially reducing asset purchases and raising interest rates at some point down the road, if these forecasts ring true" Meger added.

The dollar index was headed for its best week in nearly nine months, denting gold's allure for other currency holders.

But some analysts, including from Goldman Sachs and Commerzbank said gold could be set for a recovery.

"In a now familiar pattern, the recent gold move has outpaced both the move in the dollar and in real rates, indicating it is due for an upward price reversal in coming weeks," Goldman Sachs said in a note.

Commerzbank also kept its $2,000 an ounce year-end forecast unchanged.