Gold set for worst week in seven on dollar, yields strength

 Gold prices on Friday were on track for their worst week in seven, hurt by an overall stronger dollar and elevated bond yields as investors digested the latest U.S. inflation numbers and awaited for more economic data later in the day.

Spot gold rose 0.3% to $1,917.73 per ounce by 1037 GMT, after touching its lowest level since July 7 earlier. U.S. gold futures edged up 0.1% to $1,950.20.

Bullion has slid about 1.2% so far in the week as the U.S. dollar index and benchmark 10-year Treasury bond yields were on track for their fourth consecutive weekly gain. [USD/] [US/]

“Investors have been coming in at these low-1900s levels and they’ve been buyers, but equally, when gold has strengthened, they’ve been sellers. That’s helped to cap that range,” said Philip Newman, managing director of Metals Focus.

Data on Thursday showed U.S. consumer prices increased moderately in July, with the smallest annual increase in core inflation in nearly two years, lifting hopes that the Federal Reserve is at the end of its rate hike cycle.

However, San Francisco Fed Bank President and CEO Mary Daly said that more progress is needed before she would feel comfortable the Fed has done enough to rein in inflation.

Focus now shifts to U.S. producer prices and consumer sentiment data due later in the day.

“Investors are very focused on the expectation element of interest rates, as opposed to where they are actually, because of the Fed’s consistent messaging that it’s not about to lower rates and any rate drop has been pushed out into 2024,” Newman added.

Interest rate increases tend to lift bond yields and also raise the opportunity cost of holding non-yielding bullion.

Spot silver rose 0.1% to $22.71 an ounce and platinum added 0.8% to $914.12. Still, both were on track for their fourth straight weekly loss.

Palladium was up 2% to $1,312.52, eyeing its best week since mid-June.

Reporting by Deep Vakil in Bengaluru; Editing by Sharon Singleton