* Gold down about 2.5% so far this week
* Dollar on track for biggest weekly rise in seven months
* Silver set for about 8% weekly decline
* Palladium up over 12% this week
Jan 29 (Reuters) - Gold extended declines on Friday and was
set for its worst week since late November as growing
expectations for U.S. interest rate hikes pushed the dollar to a
multi-month high, making bullion less attractive for overseas
Spot gold fell 0.6% to $1,785.71 per ounce at 14:02
ET (1902 GMT). It hit a six-week low of $1,779.20 earlier in the
session, and was headed to drop about 2.5% for the week.
U.S. gold futures fell 0.5% to $1,786.60.
Gold prices slipped below its 100-day and 200-day moving
averages in the last session, after the U.S. Federal Reserve
reaffirmed plans to end its pandemic-era bond purchases and
signalled an interest rate hike in March.
"The current market environment has been very detrimental
for gold. Investors are completely reassessing Fed
expectations," said Edward Moya, senior market analyst at
"There's still some momentum selling in gold, but we're
getting closer to a potential bottom now that it has broken past
Rising rates increase the opportunity cost of holding
The rate hike expectations set the dollar on track for its
biggest weekly rise in seven months, making gold more expensive
for holders of other currencies.
However, gold's credentials as an inflation hedge is likely
to attract renewed attention with rising stock market volatility
amid a market adjusting to a rising interest rate environment,
Saxo Bank analyst Ole Hansen wrote in a note.
The World Gold Council (WGC) forecast that demand for
jewellery, small bars and coins would remain strong in 2022
could limit bullion's decline. WGC also expects central banks to
continue buying gold but at a slower pace.
Spot silver dropped 1.8% to $22.33 an ounce, and was
set to fall about 8% for the week.
Platinum fell 1.8% to $1,004.46, while palladium
rose 0.1% to $2,378.68, logging a weekly gain of about
(Reporting by Kavya Guduru in Bengaluru; Editing by Devika
Syamnath and Vinay Dwivedi)