Gold fell a few inches thanks to the strength of the dollar; falling yields, stocks cap losses

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Gold prices edged down on Friday as a resilient dollar put pressure on the safe-haven metal, although support from lower bond yields and US stocks kept the metal above the bar of $ 1,750.

Spot gold fell 0.2% to $ 1,753.21 an ounce at 04:03 GMT, after a drop in the dollar pushed the metal to a one-week high on Thursday. It is forecast for a first out of four weekly gain, up 0.1% this week.

US gold futures fell 0.2% to $ 1,753.40.

The dollar started the last quarter of 2021 near its highest level of the year, increasing the cost of buying gold for holders of other currencies.

Sentiment was supported, however, by lower Asian stocks and benchmark 10-year US Treasury yields.

Gold competes with government bonds as an asset used to hedge against risk and uncertainty, and falling bond yields make bullion, which pays no interest, more attractive.

“The gold market is starting to realize that the Fed may not be as hawkish as expected about the speed of the rate cut and subsequent rate hikes, especially with the recent FOMC changes,” he said. said Stephen Innes, Managing Partner of SPI Asset Management, referring to the recent retirement of two decision makers from the US Federal Reserve.

But Innes said he remains cautious about the outlook for gold, especially given the uncertain path of the dollar.

The reduction in central bank stimulus and interest rate hikes tend to push up government bond yields, which in turn translates into a higher opportunity cost for gold.

Chicago Federal Reserve Chairman Charles Evans suggested on Thursday that inflation could subside next year and that low interest rates will still be needed to bring US inflation down to 2% sustainably.

Silver fell 0.7% to $ 22.05 an ounce. Platinum lost 0.8% to $ 955.49 and palladium lost 0.3% to $ 1,905.06.

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