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Gold inches up as U.S. Treasury yields dip

written by Bella Palmer
gold

Spot gold firmed 0.2% to $1,744.07 per ounce and U.S. gold futures rose 0.1% to $1,740.50

Gold was marginally up on Friday on a dip in U.S. Treasury yields, but an elevated dollar set prices up for their biggest weekly drop in eight by dampening bullion's demand.

Spot gold firmed 0.2% to $1,744.07 per ounce by 0323 GMT. U.S. gold futures rose 0.1% to $1,740.50.

Gold prices have lost about 3.7% this week. It is likely to be their fourth straight weekly fall and worst since mid-May.

Benchmark U.S. 10-year Treasury yields edged lower, after gains in the previous two sessions, buoying non-yielding gold.

Two of the Federal Reserve's most vocal hawks on Thursday said they would support another 75 basis-point interest rate increase later this month but a downshift to a slower pace afterward.

Boosting market sentiment, U.S. President Joe Biden will discuss possible U.S. tariffs on Chinese goods in a meeting with advisers later in the day.

Gold bulls were hoping for some reprieve from the Fed, given the market narrative has pivoted from inflation fears to growth concerns, said Stephen Innes, managing partner at SPI Asset Management. But nary a dove was in sight.

Rising interest rates increase the opportunity cost of holding bullion. Gold could have trouble crossing $1,750-60 on firmer Treasury yields heading into next week's heavy U.S. data docket, headlined by the consumer price index, Innes said.

The dollar steadied near its highest since 2002, keeping greenback-priced gold near nine-month lows hit on Wednesday.

While gold is caught between elevated inflation risks and growing concerns over a recession, it has reverted to taking its cue from the dollar, which has benefited from safe-haven flows over gold, Standard Charted analyst Suki Cooper said in a note.

Gold is also vulnerable to a weaker price floor amid the seasonally slow period for demand; a key level is $1,690/oz, Cooper said.

Spot silver rose 0.2% to $19.23 per ounce, and platinum firmed 0.2% to $874.52, but both were set for weekly losses.

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