Gold inched lower on Friday as the U.S. dollar and Treasury yields firmed, although hopes for additional stimulus in the world’s largest economy kept bullion on course for a second straight weekly gain.
Spot gold eased 0.1% to $1,911.32 U.S. per ounce overnight, but was up 0.7% so far this week. U.S. gold futures shed 0.1% to $1,912.30.
The benchmark 10-year bond yield scaled a fresh high since March, holding above 1%, and helping the dollar rebound strongly to hit a near two-week peak.
A stronger greenback makes bullion more expensive for holders of other currencies, while higher bond yields increase the opportunity cost of holding the non-interest yielding gold.
Democrats’ control of the U.S. Senate has fueled hopes of large stimulus measures and boosted inflation expectations, underpinning gold’s appeal as an inflationary-hedge.
But higher inflation expectations and bond yields have also bolstered Federal Reserve officials’ hopes that the central bank’s new monetary policy approach is taking hold.
Silver fell 0.2% to $27.05 U.S. an ounce. Platinum climbed 0.4% to $1,121.46 U.S., while palladium gained 0.2% to $2,424.45 U.S.