Gold eyes fourth straight weekly gain on dollar weakness

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Gold prices inched lower on Friday but

were still on track for a weekly rise, as an overall weakness in

the dollar offset pressure from an uptick in bond yields and

expectations of further rate hikes from the U.S. Federal

Reserve.

Spot gold was down 0.1% at $1,786.89 per ounce, as of

1057 GMT. Bullion was still headed for its fourth straight

weekly gain, up nearly 1% in its longest weekly rally in almost

a year.

U.S. gold futures fell 0.3% to $1,801.10.

The dollar edged 0.4% higher on the day, but was down

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about 1% for the week. A weaker greenback makes bullion less

expensive for overseas buyers.

“Inflation easing a little has aided gold’s rally to $1,800.

But risk assets were quickly preferred and gold’s rally stalled.

If risk appetite fades over the next couple of weeks, that could

support a move above $1,800,” OANDA analyst Craig Erlam said.

Market participants have toned down expectations of an

aggressive rate hike by the Fed after cooler-than-expected

inflation data released earlier this week. However, recent

comments by some Fed officials continue to highlight a hawkish

tilt.

Gold’s appeal tends to dim amid high-interest rate

environment, as the metal yields no interest.

Fed’s Mary Daly said on Thursday that while a

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half-percentage-point interest rate hike in September “makes

sense,” she is open to the possibility of a bigger hike.

“The ongoing tightening of monetary policy is still having a

braking effect on gold… Market participants remain

correspondingly cautious and have been withdrawing funds from

the gold ETFs of late,” Commerzbank said in a note.

Weighing on gold, U.S. Treasury yields hovered near a

three-week high.

Spot silver fell 0.1% to $20.27 per ounce, palladium

slipped 0.6% to $2,264.27.

Platinum fell 0.8% to $948.74 per ounce.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by

Rashmi Aich and Shinjini Ganguli)