Gold heads for first weekly fall in five on US dollar strength

GOLD prices steadied on Friday, but were headed for their first weekly decline in five as a stronger US dollar made bullion more expensive for holders of other currencies and offset support from lower US bond yields.

Spot gold was flat at US$1,807.45 per ounce, as of 0634 GMT. Bullion is down 0.2 per cent this week. US gold futures were steady at US$1,806.20.

"Gold being a go-to alternative for paper currency and with seeing the dollar hit higher, is the catalyst that is nudging gold back," said DailyFX currency strategist Ilya Spivak.

The dollar index hovered below a 31/2 month peak against its rivals and was heading for its second straight weekly rise.

Risk appetite in wider financial markets for most of this week was fragile due to worries over the coronavirus' Delta variant impacting global economic recovery, sending investors to take refuge in the dollar.

"We expect gold to remain range bound in the coming weeks. However, inflation will remain a key driver of gold prices in the coming months, supporting prices in the near term," Fitch Solutions said in a note.

Focus now shifts to next week's US Federal Reserve meeting for more clues on monetary policy.

The European Central Bank on July 22 pledged to keep interest rates at record lows for some time.

Offering some respite to gold, yields on US Treasuries eased after an auction of US$16 billion in 10-year Treasury inflation-protected security (Tips) was bid at a record low.

On the technical front, spot gold may retest a resistance at US$1,810 per ounce, a break above which could lead to a gain into the US$1,815 to US$1,825 range, according to Reuters technical analyst Wang Tao.

Silver slipped 0.2 per cent to US$25.40 per ounce and was set for its third weekly fall.

Palladium rose 0.4 per cent to US$2,727.94, and platinum was flat at US$1,092.71. REUTERS