Gold price set for second weekly gain with inflation, dollar in focus

Credit: frankieleon | Flickr.

Gold headed for a second consecutive weekly gain, even as an advance in inflation-adjusted bond yields diminishes the appeal of the non-interest bearing asset.

Bullion is fluctuating near a key resistance level of about $1,835 an ounce, after a decline in nominal bond yields from a two-year high helped gold advance earlier in the week. On Friday, the metal was weighed down for a second day by a drop in market-based measures of inflation that raises the real return of Treasuries as it generates no interest.

Still, the precious metal is managing to hold steady even as central banks turn more hawkish. Volatility in the stock market has helped spur demand for the haven, with the S&P 500 Index on course for its worst week in almost 15 months. Geopolitical tensions between the U.S. and Russia over Ukraine may also be providing support.

With declines in equities, commodity traders using trend-following strategies “may inadvertently be adding to haven-like flows,” TD Securities strategists led by Bart Melek said in a note.

Spot gold fell 0.5% to $1,829.64 an ounce at 3:20 p.m. in New York, but still on track for a 0.6% gain this week. Bullion for April delivery slipped 0.6% to settle at $1,834.10 on the Comex. The Bloomberg Dollar Spot Index fell 0.1%. Silver and platinum declined, while palladium gained.

(By Yvonne Yue Li, with assistance from Swansy Afonso, Eddie Spence and Ranjeetha Pakiam)


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