Gold dips as dollar, Treasury yields recover; faces worst week in a month

GOLD prices fell on Friday (Jun 17), as the dollar and US Treasury yields recovered after declining in the previous session and put bullion on track for its biggest weekly drop in a month.

Spot gold was down 0.6 per cent at US$1,845.89 per ounce as of 1.04 am GMT. US gold futures were flat at US$1,849.20.

Benchmark US 10-year Treasury yields strengthened after a sharp fall on Thursday, weighing on demand for non-yielding gold.

The dollar index also rose, making greenback-priced bullion less attractive.

World stocks plummeted again on Thursday after a series of rate rises from global central banks rekindled fears that aggressive policy tightening could drag economies into recession.

Gold prices have fallen about 1.3 per cent in what has been a volatile week, and its worst since mid-May, after starting it near a 1-month peak before hitting a 4-week low on Tuesday.

The US Federal Reserve announced its biggest interest rate hike since 1994 on Wednesday, as it scrambles to rein in soaring inflation. Rising rates in the United States increase the opportunity cost of holding gold.

The Bank of Japan is likely to maintain ultra-low interest rates in its policy meeting later in the day and stress its resolve to support a fragile economy with massive stimulus, a move that may further weaken the yen by highlighting a policy divergence with the rest of the world.

Spot silver fell 0.9 per cent to US$21.73 per ounce and is down about 0.7 per cent this week.

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Platinum dipped 0.9 per cent to US$942.44 and has dropped about 3.2 per cent for the week.

Palladium rose 0.2 per cent to US$1,869.24 but is still set for a third consecutive weekly fall, having lost about 2.6 per cent. REUTERS