Gold prices drifted higher on Friday
helped by a drop in US Treasury yields and setting the metal
on path for a fourth straight week of gains, as investors took
stock of the recent inflation data out of the United States.
Spot gold rose 0.5% to $1,798.86 per ounce by 1800
GMT and was headed for a more than 1% weekly rise. US gold
futures also settled up 0.5% at $1,815.5.
“Currently the gold market is seeing some short-covering and
is supported by lower yields,” said Bart Melek, head of
commodity strategy at TD Securities.
US Treasury yields dipped after a volatile week as
investors evaluated whether an apparent slowdown in inflation
increases could reduce the speed of Federal Reserve interest
Data released earlier this week indicated that inflation in
the US has cooled down, following which market participants
toned down expectations of an aggressive rate hike by the Fed.
However, recent Fed commentary continues to be hawkish and
have stopped the metal from breaking above the $1,800 level.
“Gold’s rally, after cooler CPI numbers, stopped in its
tracks as the market believes inflation will continue to be a
problem. Fed speakers have also suggested they can’t afford to
relinquish the fight against inflation,” Melek added.
Gold tends to do well in a low-interest environment as it
yields no interest.
“Rising risk appetite as seen through surging stocks and
bond yields … have so far prevented the yellow metal from
making a decisive challenge at key resistance above $1,800,”
Saxo Bank analyst Ole Hansen said.
Meanwhile, high domestic prices restrained physical gold
demand in India this week, while uncertainty surrounding
Taiwan-related developments prompted bullion importers in China
to hold off on big purchases.
Spot silver rose around 2% to $20.70 per ounce,
platinum was up 0.3% at $958.57, while palladium
fell 1.8% to $2,235.09.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by