Gold falls 1% as dollar accelerates rally
By Shreyansi Singh (Reuters) - Gold prices slumped more than 1% on Friday and the metal was heading for a second straight weekly drop as the dollar continued its upturn, overshadowing bullion's appeal as an inflation hedge as the United States rolls out more stimulus. Spot gold was down 1.1% at $1,825.41 per ounce by 10:52 a.m
By Shreyansi Singh
(Reuters) - Gold prices slumped more than 1% on Friday and the metal was heading for a second straight weekly drop as the dollar continued its upturn, overshadowing bullion's appeal as an inflation hedge as the United States rolls out more stimulus.
Spot gold was down 1.1% at $1,825.41 per ounce by 10:52 a.m. EST (1552 GMT), while U.S. gold futures fell 1% to $1,833.30.
The dollar index was on track for its biggest weekly gain since October 2020, making bullion more expensive for holders of other currencies.
"Bouts of dollar strength and the uptick in U.S. yields have triggered short-term corrections," said Standard Chartered Analyst Suki Cooper.
"The gold market is caught between longer-term buying on the back of rising inflation expectations given stimulus measures, but selling as the dollar has bounced and concern over QE tapering materialised."
Benchmark 10-year Treasury yields held close to near 10-month highs touched earlier in the week.
"The Biden administration should support a much more expansive spending agenda than before," said Tai Wong, head of base and precious metals derivatives trading at BMO.
"But it seems like the stubborn short-term resilience of the dollar and concern for even higher yields is triggering steady liquidation in gold."
U.S. President-elect Joe Biden outlined a $1.9 trillion stimulus package proposal on Thursday.
While gold is considered a hedge against the inflation and currency debasement that can result from widespread stimulus, a recent jump in bond yields has challenged that status as it increases the opportunity cost of holding non-yielding bullion.
On the technical front, gold has solid support around $1,775, and a dip to that level could trigger buying again, said Michael Matousek, head trader at U.S. Global Investors.
Silver fell 3.5% to $24.63 an ounce, having earlier dipped as much as 3.8%. Platinum dipped 3.9% to $1,074.63, having declined 4.4% earlier, while palladium shed 0.8% to $2,389.88.
(Reporting by Shreyansi Singh in Bengaluru; Editing by Dan Grebler)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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