Gold prices were set on Friday for a third straight weekly gain, supported by a retreat in US bond yields and dollar with investors focussing on the Federal Reserve’s response to inflationary pressure and concerns over tepid economic growth.
Spot gold was down 0.1% at $1,796.31 per ounce, as of 0628 GMT, but gained 0.2% so far this week. US gold futures dropped 0.4% to $1,796.20.
Benchmark 10-year US Treasury yields were set to mark their worst week in three months, reducing the opportunity cost of non-yielding bullion.
The US dollar was headed for a third straight weekly decline, making gold more attractive to buyers holding other currencies.
Investors now await next week’s Fed policy meeting, after data showed the US economy grew at a slower pace last quarter.
“The baseline is that the Fed wants to be done tapering by mid-2022, but there’s the risk of a more hawkish Fed if it suggests it could be open to tapering faster, which should strengthen the dollar and weaken gold,” DailyFX currency strategist Ilya Spivak said.
“Gold should see a slow grind lower towards $1,700 and possibly under it into year-end.”
Reduced stimulus and interest rate hikes tend to push government bond yields and the dollar up, denting gold’s appeal.
“But, with inflation showing no signs of abating, investors see precious metals at current prices as attractive assets” said Vincent Tie, sales manager at Singapore dealer Silver Bullion.
“Silver, in particular, is seen as one of the cheapest metals in the market given that it is still far from hitting a new high in price.”
Spot silver fell 0.9% to $23.88 per ounce and was set for its worst week since mid-September.
Analysts in a Reuters poll trimmed their gold price forecasts for the rest of this year and next.
In another poll, analysts also lowered price forecasts for palladium and platinum.
Platinum fell 0.6% to $1,013.51 per ounce, while palladium dropped 0.1% to $1,987.46. (Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)