Gold prices drop on strong dollar

by Jonathan Adams
Gold prices drop

Spot gold was 0.2% lower at $1,803.33 per ounce, while U.S. gold futures shed 0.1% to $1,803.90

Price of gold dropped on Friday, heading for their first weekly decline in five, as a stronger dollar made bullion more expensive for holder of other currencies and offset support from lower U.S. bond yields and weak economic data.

Spot gold was 0.2% lower at $1,803.33 per ounce, as of 0314 GMT. Bullion is 0.4% lower this week. U.S. gold futures shed 0.1% to $1,803.90.

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

The dollar index was near a 3-1/2-month peak against its rival and was heading for its second weekly rise in a row.

For most of this week, risk appetite in wider financial markets was fragile due to concern over the Delta variant of the coronavirus 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.

Investors now focus on next week’s U.S. Fed meeting for more clues on monetary policy.

Yields on U.S. Treasuries eased after an auction of $16 billion in 10-year TIPS was bid at a record low, offering some respite to gold.

Meanwhile, the number of Americans filing new claims for unemployment benefits rose to a two-month high last week, data showed.

Silver slid 0.5% to $25.34 per ounce and was set for its third weekly fall.

Palladium gained 0.3% to $2,725.19, while platinum was flat at $1,092.64.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
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