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Gold set for weekly rise on subdued dollar

written by Bella Palmer

Spot gold was down 0.1% at $1,787.83 per ounce

Gold prices inched lower on Friday but were still on track for a weekly rise, as an overall weakness in the dollar offset pressure from an uptick in bond yields and worries over further rate hikes from the U.S. Federal Reserve.

Spot gold was down 0.1% at $1,787.83 per ounce, as of 0835 GMT.

Bullion was still headed for its fourth straight weekly gain, up nearly 1% in its longest weekly rally in almost a year. U.S. gold futures fell 0.2% to $1,804.00.

The dollar edged 0.3% higher on the day, but was down about 1.2% for the week.

A weaker greenback makes bullion less expensive for overseas buyers.

Inflation easing a little has aided gold's rally to $1,800. But risk assets were quickly preferred and gold's rally stalled. If risk appetite fades over the next couple of weeks, that could support a move above $1,800, OANDA analyst Craig Erlam said.

Market participants have toned down expectations of an aggressive rate hike by the Fed after cooler-than-expected inflation data released earlier this week. However, recent comments by some Fed officials continue to highlight a hawkish tilt.

Fed's Mary Daly said on Thursday that while a half-percentage-point interest rate hike in September ‘makes sense,’ she is open to the possibility of a bigger hike.

Gold's appeal tends to dim amid high-interest rate environment, as the metal yields no interest. Weighing on gold, U.S. Treasury yields hovered near a three-week high.

The Russia-Ukraine war and China-U.S. relations are issues that could trigger (safe) haven buying. Investment demand for gold remains challenging, investors are liquidating exchange traded funds (ETF), ANZ analysts said in a note.


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