Gold prices inch higher as dollar softens; set for weekly loss

GOLD firmed on Friday (Jul 8) as the dollar came slightly off 2-decade highs, but bullion was set to post its biggest weekly drop in more than a month as the elevated greenback hit demand.

Spot gold firmed 0.3 per cent to US$1,744.07 per ounce by 1.06 am GMT. US gold futures rose 0.2 per cent to US$1,742.50.

The dollar edged down from 20-year highs, taking some weight off greenback-priced gold.

Gold prices have lost about 3.7 per cent this week. It is likely to be their fourth straight weekly fall and worst since mid-May.

US equities rose with Treasury yields overnight, as investors bet on economic light at the end of the Federal Reserve's rate hiking tunnel, while oil prices rose on supply concerns.

Benchmark US 10-year Treasury yields dipped on Friday, buoying gold.

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The number of Americans filing new claims for unemployment benefits unexpectedly rose last week and there are growing signs that demand for labour is cooling, with layoffs surging to a 16-month high in June, as the Federal Reserve's aggressive monetary policy tightening stokes recession fears.

Two of the Fed's most vocal hawks on Thursday said they would support another 75 basis-point interest rate increase later this month but a downshift to a slower pace afterwards, even as both downplayed the risk of higher borrowing costs pushing the US into recession.

Rising short-term US interest rates and bond yields increase the opportunity cost of holding gold, which yields no interest.

Spot silver rose 0.5 per cent to US$19.28 per ounce, and platinum gained 0.6 per cent to US$878.40, but both were set for weekly losses.

Palladium climbed 0.8 per cent to US$2,006.51 and has gained about 2.3 per cent for the week. REUTERS