Gold up, heads for second weekly rise as US dollar eases off session high

[BENGALURU] Gold rose on Friday, on track for a second weekly gain as US Treasury yields dipped and US dollar eased off session highs.

Spot gold rose 0.3 per cent to US$1,742.14 per ounce at 3.11pm EDT (1911 GMT), and was up 0.9 per cent this week.

US gold futures settled up 0.5 per cent at US$1,741.70.

"The 10-year rates have dropped a little bit and the dollar which was higher has also come off. We could see gold do a little bit better if the rates situation start to stabilize," said ED&F Man Capital Markets analyst Edward Meir.

The US 10-year yields eased after hovering near a more than one-year peak scaled in the last session. The US dollar retreated from the session peak, which was its highest in more than a week.

"The expected growth prospects, continuation of the relatively low interest rate environment does bring about some fears of inflation," which is gold supportive, said David Meger, director of metals trading at High Ridge Futures.

Gold is often seen as a hedge against inflation, but higher yields have threatened that status.

On the technical front, "in the near term gold faces resistance around the US$1,765/oz level," said Standard Chartered analyst Suki Cooper.

Meanwhile, the first high-level US-China meeting of the Biden administration got off to a fiery start on Thursday, with both sides leveling sharp rebukes of the others' policies.

"The fact that the talks did not go well could be a little bit supportive... (but) right now it is mainly a war of words," Mr Meir said, pointing to the tit-for-tat tariffs the two sides had exchanged in the past.

Gold is seen as a safe haven during times of political uncertainties.

Elsewhere, palladium fell 1.9 per cent to US$2,630.59 per ounce, but was up 11 per cent for the week - its biggest since early November.

Platinum dropped 0.9 per cent to US$1,196.51 an ounce, while silver rose 0.5 per cent to US$26.17.

REUTERS