Gold set for first weekly drop in three as yields, dollar strengthen

div classBodysc17zpet90 cdBBJodivpBy Bharat Gautamp

pReuters – Gold prices were flat on Friday, pressured by the strength in U.S. Treasury yields and the dollar, which also put bullion on course for its first weekly loss in three. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pSpot gold held its ground at 1,952.17 per ounce, as of 0501 GMT. U.S. gold futures were up 0.3 at 1,953.90.p

p“The outlook for gold is subdued as rising rates obviously weigh, but until we break the trading range between 1,930 to under 2,000 in a convincing manner … we really dont have much of a direction for gold,” said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.p

pBenchmark U.S. 10year Treasury yields extended gains as Federal Reserve officials took a hawkish tone on tightening policy, cementing the view that the U.S. central bank will hike interest rates aggressively as it fights soaring inflation. [US] p

pGold is highly sensitive to rising U.S. shortterm interest rates and higher yields, which increase the opportunity cost of holding nonyielding bullion.p

pA stronger U.S. dollar could also pressure gold, while on the other hand, the geopolitical uncertainty remains a support and the gold price is stuck in the middle of those two conflicting currents, McCarthy said. [USD] p

pA firmer dollar makes greenbackpriced gold less attractive for overseas buyers.p

pGold is down about 1.2 so far this week. Prices rose to near the key mark of 2,000 per ounce on Monday on safehaven demand and mounting worries over inflation, but have since pulled back to hit a twoweek low in the previous session. p

p“With stagflation moving from a potential tail risk to reality, investors worldwide are turning to gold as a keen portfolio diversifier,” Stephen Innes, managing partner at SPI Asset Management said in a note. p

pSpot silver fell 0.4 to 24.54 per ounce, while platinum firmed 0.1 to 968.79, with both poised for weekly losses. Palladium rose 0.4 to 2,430.95.