Investing.com - Gold futures tumbled to a nine-month low on Friday, as a broadly stronger U.S. dollar and growing expectations for higher U.S. interest rates dampened sentiment for the precious metal.
On the Comex division of the New York Mercantile Exchange, gold for December delivery hit a session low of $1,214.20 a troy ounce on Friday, a level not seen since January 2.
Prices recovered to settle at $1,216.60, down $10.30, or 0.84%, for the day. For the week, Comex gold prices lost $14.90, or 1.2%, the third consecutive weekly drop.
Futures were likely to find support at $1,204.30, the low from January 2 and resistance at $1,240.10, the high from September 17.
The Federal Reserve cut its monthly bond-buying program by another $10 billion following its two-day policy meeting on September 17, keeping the program on track to finish next month.
While the Fed reiterated that it expects rates to remain on hold for a "considerable time" after its quantitative easing program ends, it also projected a faster pace of rate hikes.
For the end of 2015, the median forecast was 1.375% compared to a June forecast of 1.125%.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Speaking at the central bank’s post-policy meeting press conference, Fed Chair Janet Yellen emphasized that the timing of the first rate hike would be data-dependent.
The dollar rose to its highest level in more than six years against the yen USD/JPY, while the euro EUR/USD slid to fresh 14-month lows, as markets interpreted the Fed's statement as hawkish.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
In the week ahead, investors will be focusing on U.S. data on new and existing home sales, as well as reports on durable goods orders and initial jobless claims.
A recent batch of upbeat U.S. economic data underlined optimism over the strength of the economy and fuelled expectations that the Fed will begin to raise rates sooner than previously thought.
Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in gold futures in the week ending September 16.
Net longs totaled 55,716 contracts, down 21.9% from net longs of 71,376 in the preceding week.
Also on the Comex, silver for December delivery plunged 67.3 cents, or 3.63%, on Friday to settle the week at $17.84 a troy ounce by close of trade. Prices hit a daily low of $17.78 earlier, the weakest level since August 2010.
On the week, the December silver futures contract lost 76.0 cents, or 4.08%, the ninth weekly decline over the past ten weeks.
Data from the CFTC showed that net silver shorts totaled 4,557 contracts as of last week, compared to net longs of 2,237 contracts in the preceding week.
Elsewhere in metals trading, copper for December delivery shed 0.2 cents, or 0.08%, on Friday to end the week at $3.091 a pound by close of trade.
Comex copper prices lost 1.5 cents, or 0.48%, on the week, amid speculation weakening economic growth in China will reduce demand for the industrial metal.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
According to the CFTC, net copper longs totaled 805 contracts as of last week, compared to net shorts of 2,077 contracts in the preceding week.