Gold eases on firmer US yields, but set for best week in seven

[BENGALURU] Gold prices retreated on Friday as firmer US bond yields and a strong dollar weighed on the metal, but bullion was on course for its biggest weekly gain in seven.

Spot gold eased 0.2 per cent to US$1,718.10 per ounce by 3.44am GMT. The metal's prices had slumped to a nine-month low on Monday, but a pullback in Treasury yields helped spark a rebound that has put gold on track for a weekly gain of 1 per cent.

US gold futures fell 0.4 per cent to US$1,715.10.

"It's basically a function of elevated yields and although yields aren't marching higher, the problem is they're not going lower, and that presents a problem," said Stephen Innes, chief global market strategist at financial services firm Axi.

"Gold's going to hold around US$1,700 ... unless we break new ground on higher yields." Benchmark US Treasury yields climbed, increasing the opportunity cost of holding gold, while the dollar bounced back from a near one-week low.

Investors are now awaiting the US Federal Reserve meeting next week for direction on its monetary policy.

President Joe Biden on Thursday signed his US$1.9 trillion stimulus bill into law and said he was working to speed Covid-19 vaccinations and move the country closer to normality by July 4.

"The implementation of Biden's pandemic relief bills is stoking fears of a massive supply of bonds hitting the market, as well as rising inflation," ANZ analysts said in a note.

"The continued rollout of vaccines is also supporting the labour market, thus diminishing support for safe-haven assets."

Silver eased 0.5 per cent to US$25.94 an ounce, but was on track for its best week since late January with a 3 per cent rise.

Palladium fell 0.2 per cent to US$2,339.54.

Platinum rose 0.6 per cent to US$1,202.21 and was set to post its best week in four with a 6.5 per cent gain.

REUTERS