Gold set for third weekly fall on stronger US dollar, yields

Gold prices hovered near a one-month low on Friday and were heading for their third consecutive weekly dip, as the dollar and bond yields strengthened after data showed U.S. producer prices increased in July.

After dropping to its lowest level since July 7 earlier in the session, spot gold was little changed at $1,913.35 per ounce by 1:41 p.m. ET (1741 GMT). Bullion was down 1.4% so far this week.

U.S. gold futures settled 0.1% lower at $1,946.60.

“The producer price index came a bit hotter than expected, that pushed up Treasury bond yields and boosted the U.S. dollar index a little bit. So that put a little bit of pressure on the gold market,” said Jim Wyckoff, senior market analyst at Kitco.

“We’re also seeing technical selling in both gold and silver because the charts have turned more near-term bearish in the past couple of weeks.”

The U.S. producer price index for final demand rose 0.3% last month, the Labor Department said. In the 12 months through July, the PPI increased 0.8%. Economists polled by Reuters had forecast the PPI would climb 0.2% for the month and advance 0.7% on a year-on-year basis.
The dollar gained 0.3% against its rivals and was on track for its fourth consecutive weekly gain, making gold more expensive for other currency holders. Benchmark 10-year yields also gained for the fourth straight week. On Thursday, data showed U.S. consumer prices increased moderately in July, lifting hopes that the Federal Reserve is at the end of its interest rate hike cycle.

Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion.

Spot silver slipped 0.1% to $22.66 an ounce and platinum gained 0.4% to $910.06. Both were on track for their fourth consecutive week of losses.

Palladium rose 0.9% to $1,298.19 per ounce.