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Gold steady near 5-week lows, heads for biggest weekly fall in 4

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Gold prices languished near a five-week low on Friday, set for a decline of more than 1 per cent this week, weighed down by a strong US dollar, high US Treasury yields and easing geo-political concerns.

[BENGALURU] Gold prices languished near a five-week low on Friday, set for a decline of more than 1 per cent this week, weighed down by a strong US dollar, high US Treasury yields and easing geo-political concerns.

Spot gold was steady at US$1,316.34 per ounce at 0700 GMT, not far from a low of US$1,315.06 an ounce hit in the previous session, its weakest since March 21.

US gold futures were down 0.1 per cent at US$1,317.20 per ounce.

"The strength of the US dollar - combined with the weakness of the eurozone currency, after (ECB chief) Mario Draghi speech - is pushing down the yellow metal. The recovery of the greenback is stopping any gold bullish movement," said Activtrades chief analyst Carlo Alberto De Casa.

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The dollar hit a fresh 3-1/2-month high against a basket of currencies on higher US yields, while the euro was hampered by a dovish tone from the European Central Bank.

On Wednesday, the benchmark 10-year Treasury yield reached its highest since January 2014, at 3.035 per cent.

A rise in US bond yields pressures gold by reducing the attractiveness of non-interest paying bullion, which is priced in US dollars.

"We are still in the channel between US$1,300 and US$1,360, but, again, we are approaching the bottom area of this lateral trading range. We could expect a first reaction of the precious metal if prices reach 1,300/1,305," Alberto De Casa said.

"The breakdown of this area ... could represent a negative signal."

The yellow metal was on track to fall over 1 per cent this week, its second consecutive and the biggest weekly decline in four.

"All eyes will be on the US GDP number out on Friday and this should give markets more direction heading into next week," said INTL FCStone analyst Edward Meir.

"We likely will see another strong day in the stock markets on Friday, yet another variable that could weigh on gold, especially if the US GDP number comes in on the stronger side."

Strong GDP numbers may prompt faster interest rate rises in the United States and gold as a non-interest-paying asset could see demand taking a hit from higher rates.

Meanwhile, political risks were seen easing after North Korean leader Kim Jong Un and South Korean President Moon Jae-in met on Friday in the first summit for the two Koreas in over a decade. The meeting, aimed at ending their decades-long conflict, comes weeks before Mr Kim is due to meet US President Donald Trump.

Silver was up 0.1 per cent to US$16.49 per ounce. For the week, the metal is down over 3 per cent so far, its biggest weekly decline since the week ending Feb 2. Platinum lost 0.1 per cent to US$905.20 per ounce, after matching a more than four-month low of US$901 touched on Thursday. Palladium eased 0.1 per cent to US$984 an ounce and has fallen over 4 per cent so far this week, after two weeks of gains.

REUTERS