Stronger dollar, rising yields weigh on gold

Bengaluru — Gold prices fell on Friday and were on track for a weekly loss, as a firmer dollar and rising US Treasury yields dampened the metal’s safe-haven appeal.

Spot gold was down 0.3% at $1,821.89/oz at 4.01am GMT. For the week, bullion has lost nearly 0.5%. US gold futures eased 0.1% at $1,822.10/oz.

“When you get the combination of yields going up and a slightly stronger dollar, it’s not a great environment for gold, especially going into the weekend,” said Stephen Innes, managing partner at SPI Asset Management.

The dollar index held firm near a one-week high, and was set for a weekly gain against its rivals.

Benchmark US 10-year Treasury yields were trading above the key 1.6% level and were on track for a strong weekly rise. Higher bond yields raise the opportunity cost of holding non-interest bearing gold.

Key economic readings out of the US this week showed a bigger-than-expected rise in consumer prices and weekly jobless claims dropping to a 14-month low, intensifying concerns over rising inflation and possible interest rate hikes.

“Right now we haven’t had any inclination that the US Federal Reserve is about to move any time soon, I think gold still remains relatively supported,” Innes said.

The US central bank has pledged to keep interest rates low until the economy reaches full employment, and inflation is on track to “moderately” exceed the 2% level for some time.

Lower interest rates reduce the opportunity cost of holding bullion.

Fed Governor Christopher Waller suggested the Fed would not raise rates until it sees inflation above target for a long time, or excessively high inflation.

Elsewhere, palladium gained 0.7% to $2,882.25/oz, but was set for a second straight weekly loss with a drop of about 1.5%.

Silver fell 0.5% to $26.92/oz, while platinum was up 0.7% at $1,214.18/oz.

Reuters