IGI Logo

Gold prices edged up slightly on Friday but a stronger dollar and a rise in U.S. Treasury yields put the metal on course for its first weekly decline in three.

Spot gold rose 0.4% to $1,733.26 per ounce at 12:19 p.m EDT (1619 GMT) but it was down 0.7% this week. U.S. gold futures were up 0.4% at $1,732.60.

"Dips are being bought and rallies are being sold into (in the gold market)... there are clearly two definitive sides of a coin and this is the main focal point," David Meger, director of metals trading at High Ridge Futures, said.

A firmer dollar and rising yields pressuring gold are one side of the coin and rising coronavirus cases and the Fed's low-interest rate policy lifting it are another, Meger added, noting it remains unclear which side will ultimately prevail.

Gold's modest gains came despite a firmer dollar and an uptick in benchmark yields, that have weighed on its appeal recently.

A stronger dollar makes holding greenback-denominated bullion more expensive for those holding other currencies, while higher yields raise the non-yielding metal's opportunity cost.

But, "beyond the near term, the macro backdrop is set to remain supportive of gold as the dollar weakening trend resumes and we expect real yields to remain negative," Standard Chartered analyst Suki Cooper said in a note.

In the near term, gold lacks a macro catalyst to drive it higher but physical demand should limit its downside, she added, predicting it to average $1,775 in the second quarter.

The biggest gold-backed exchange traded fund, SPDR Gold Trust, has seen outflows of more than 140 tonnes so far this year.

Among other precious metals, silver rose 0.1% to $25.04, palladium gained 2.4% to $2,671.70 and platinum was up 2.4% at $1,174.89.