Gold slips on buoyant yields; set for weekly gain

FILE PHOTO: Gold bullion is displayed at GoldSilver Central's office in Singapore
Shreyansi Singh
·2 min read

By Shreyansi Singh

(Reuters) - Gold slipped more than 1% on Friday, weighed down by a jump inU.S. Treasury yields and a rebound in the dollar, but bullionwas still on course for its first weekly gain in three weeks.

Spot gold fell 0.7% to $1,743.73 per ounce by 11:16a.m. EDT (1516 GMT), after declining as much as 1.4%, having hitits highest price since March 1 at $1,758.45 on Thursday. For the week, however, prices were up about 0.9%.

U.S. gold futures slipped 0.8% to $1,744.20. "While overall, gold market is bullish short-term, withexpectations of a break higher through $1,760-65, caution aboutfresh 10 and 30-year (Treasury) auctions and the CPI report nextweek are keeping yields supported, keeping gold's advance incheck," said Tai Wong, head of base and precious metalsderivatives trading at BMO.

"Yields are driving most markets at moment, directlyimpacting USD and stocks and all three matter to gold withvarying impact."

The dollar and benchmark U.S. yields rebounded fromtwo-week lows, reducing gold's appeal.

U.S. producer prices increased more than expected in March,resulting in the largest annual gain in 9-1/2 years, fittingwith expectations for higher inflation as the economy reopens.

"This type of potentially inflationary environment isgenerally viewed as supportive for gold," said David Meger,director of metals trading at High Ridge Futures.

In a potential fillip to gold's safe-haven appeal, U.S.Federal Reserve Chair Jerome Powell on Thursday signalled thecentral bank is nowhere near reducing its economic support, and warned an uptick in COVID-19 cases could slow the recovery.

"Gold's retreat from last year's peak is a 'mini-correction'in a longer bull market," said Davis Hall, head of capitalmarkets in Asia at Indosuez wealth management.

Silver slipped 0.8% to $25.23, while platinumshed 2.8% to $1,195.16.

Palladium rose 0.5% to $2,637.00, but was on track for its biggest weekly fall since the week ending Feb. 26.

(Reporting by Shreyansi Singh and Sumita Layek in Bengaluru; Editing by Matthew Lewis)