Gold slips off one-month peak as U.S. dollar, yields rebound

Gold dipped on Friday as a stronger dollar and rebounding yields dulled its appeal and pushed the metal off one-month highs reached in the last session on dovish remarks from the head of the U.S. Federal Reserve.

Spot gold fell 0.6 per cent to $1,817.40 per ounce by 10:18 a.m. EDT, though it was up 0.5 per cent so far this week. U.S. gold futures fell 0.3 per cent to $1,824.20.

Benchmark U.S. 10-year Treasury yields edged up from one-week lows and the dollar index was bound for a strong weekly gain.

TD Securities commodity strategist Daniel Ghali said gold’s inability to benefit substantially from weaker U.S. real yields suggested that it remains vulnerable to a further pull-back.

“Although gold’s valuation is more attractive on a relative basis to U.S. Treasury inflation protected securities (TIPS), the reason gold is trading at a discount to it is because it does not have the same carry advantage.”

Earlier this week, Fed Chair Jerome Powell reiterated that the U.S. central bank would remain accommodative and stuck to the view that recent price spikes were transitory. His remarks sent gold to a one-month high on Thursday.

Uncertainty around a potential spike in COVID-19 Delta variant cases in the United States could force the Fed to remain accommodative for longer, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

U.S. equities also remain susceptible to a further pull-back, Streible said, adding to gold’s appeal and potentially helping it to climb to $1,850 in the near-term.

Market participants also took stock of data showing an unexpected rise in U.S. retail sales last month on board.

Elsewhere, silver fell 1.7 per cent to $25.88 per ounce, while platinum lost 2.3 per cent to $1,112.21.

Palladium slid 3.3 per cent to $2,641.00 per ounce and was headed for its first weekly decline in four.