Gold hits 9-1/2-month low on firm US dollar; set for third weekly loss

[BENGALURU] Gold lost 1 per cent to touch its lowest level in 9-1/2 months in Asian trade on Friday, on track to post a third consecutive weekly decline, as the dollar extended its bull run against the yen on the back of rising bond yields.

Spot gold was down 0.8 per cent at US$1,173.56 an ounce by 0231 GMT. Earlier in the session, the metal dropped 1 per cent to mark its lowest since Feb 8 at US$1,171.21 per ounce.

US gold futures fell 1.4 per cent to US$1,172.6 per ounce, after dipping earlier to its lowest since Feb 5 at US$1,170.30 per ounce.

"The dollar has been really strong this morning and is pushing high. The Shanghai arbitrage is trading US$25 dollar premium, which seems to be suggesting that there is selling from Asia rather than buying," an investment bank trader said.

Bullion shed over 8 per cent so far this month and has lost over US$160 an ounce since the peak after the US election on Nov 9, hurt by a strong US dollar and surging Treasury yields as investors bet on higher growth and inflation under US president-elect Trump.

The US dollar on Friday rose to an eight-month high against the yen, lifted by US bond yields, which resumed their rise in Asia after the Thanksgiving break shut markets in the United States.

The 10-year US Treasury note yield rose about 3 basis points to 2.382 per cent from the previous close on Wednesday.

"The dollar is firm and triggering some selling (in gold). There were some stops around US$1,180 and they were all taken,"said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"There has been some physical buying, but that is not so strong and is not helping gold," Mr Leung added.

Spot gold is expected to drop to US$1,172 per ounce, as the support at US$1,184 does not look to hold, according to Reuters technical analyst Wang Tao.

Silver slipped 0.12 per cent to US$16.23 an ounce. Platinum slid 1.1 per cent to US$903.49, after having earlier hit its lowest since Feb 8 at US$901.00.

Both metals were on track to post a third straight weekly decline.

Palladium dropped 0.66 per cent to US$724.22.

REUTERS