Gold Set For Second Weekly Gain As U.S. Yields Extend Slide – Reuters

Jan 21 (Reuters) – Gold prices edged higher on Friday and were set for a second weekly gain as safe-haven demand and retreating U.S. bond yields lifted the metal’s appeal, while auto-catalyst palladium hovered near a two-month high scaled in the previous session.

Spot gold was up 0.2% at $1,842.46 per ounce, as of 0719 GMT, inching towards Thursday’s two-month high of $1,847.72. U.S. gold futures were flat at $1,842.20 per ounce.

Benchmark U.S. 10-year Treasury yields weakened, reducing the opportunity cost of holding non-yielding bullion.

Gold managed to hold its ground even as the U.S. Fed became more hawkish, and that’s probably because real rates are negative, DailyFX currency strategist Ilya Spivak said.

Investor focus is now on the Federal Open Market Committee meeting scheduled on Jan. 25-26 for updates on the Fed’s plans for rate hikes. read more

While gold is an inflationary hedge, it is also sensitive to rising U.S. interest rates, which reduce the appeal of holding non-interest-bearing bullion.

Gold has gained about 1.3% so far this week and is poised for a second weekly rise.

A little bit of rumbling to the upside in gold could be an initial knee-jerk appreciation that risk is actually tilted toward a dovish surprise, even if the Fed doesn’t do anything different, just because of where the market’s state of mind is, Spivak said.

Spot palladium eased 0.3% to $2,053.41 per ounce, but was poised for a weekly gain of about 9.2%. Platinum was up 0.1% at $1,040.36, set for its best week since last June.

“Auto sales growth is expected to normalise this year, with easing supply chain issues, which should benefit the auto catalyst makers’ demand for PGMs (Platinum Group Metals),” ANZ research said in a note.

Elsewhere, silver rose 0.4% to $24.54 per ounce, set for its best week in a year, having risen 6.9% so far.

Reporting by Bharat Govind Gautam and Seher Dareen in Bengaluru; Editing by Uttaresh.V and Sherry Jacob-Phillips

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