Gold eyes fourth straight weekly gain on dollar weakness

Key Points
  • Gold prices drifted higher on Friday.
  • Overall weakness in the dollar offset pressure from an uptick in bond yields and expectations of further rate hikes from the Federal Reserve.
A photo of turtle figures made of gold at the Korea Gold Exchange store on Wednesday, March 2, 2022.
SeongJoon Cho | Bloomberg | Getty Images

Gold prices drifted higher on Friday helped by a drop in U.S. Treasury yields and setting the metal on path for a fourth straight week of gains, as investors took stock of the recent inflation data out of the United States.

Spot gold rose 0.6% to $1,800.196 per ounce and was headed for a more than 1% weekly rise. U.S. gold futures were up 0.54% at $1,817.00.

"Currently the gold market is seeing some short-covering and is supported by lower yields," said Bart Melek, head of commodity strategy at TD Securities.

U.S. Treasury yields dipped after a volatile week as investors evaluated whether an apparent slowdown in inflation increases could reduce the speed of Federal Reserve interest rate hikes. Data released earlier this week indicated that inflation in the U.S. has cooled down, following which market participants toned down expectations of an aggressive rate hike by the Fed.

However, recent Fed commentary continues to be hawkish, which had stopped the metal from breaking above the $1,800 level.

"Gold's rally, after cooler CPI numbers, stopped in its tracks as the market believes inflation will continue to be a problem. Fed speakers have also suggested they can't afford to relinquish the fight against inflation," Melek added.

Gold tends to do well in a low-interest environment as it yields no interest.

Meanwhile, high domestic prices restrained physical gold demand in India this week, while uncertainty surrounding Taiwan-related developments prompted bullion importers in China to hold off on big purchases.

Spot silver rose 2.38% to $20.774 per ounce, platinum was up 0.58% at $961.65 while palladium fell 2.82% to $2,212.58.