IGI Logo

Gold prices were flat on Friday, weighed down by an uptick in the Treasury yields and prospects of U.S. interest rate hikes, although broader weakness in the dollar kept bullion on track for its fourth weekly gain.

FUNDAMENTALS

* Spot gold was flat at $1,787.57 per ounce, as of 0120 GMT. However, bullion has gained 0.7% so far this week.

* U.S. gold futures fell 0.2% to $1,803.10.

* Benchmark U.S. 10-year Treasury yields were hovering near a three-week peak, increasing the opportunity cost of holding non-interest-bearing gold. [US/]

* Data on Thursday showed U.S. producer prices unexpectedly fell in July. It came a day after news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices.

* San Francisco Federal Reserve Bank President Mary Daly said a 50-basis-point interest rate hike in September "makes sense" given the recent economic data including on inflation, but that she is open to a bigger rate hike if data warrants.

* Earlier this week, U.S. Fed policymakers noted that they would continue to tighten monetary policy until price pressures were fully broken.

* Fed funds futures traders are now pricing in a 61.5% chance of a 50-basis-point hike in September and a 38.5% chance of a 75-basis-point increase.

* Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

* The dollar was set for its third weekly loss in four against its rivals. A weaker greenback makes dollar-denominated gold less expensive for other currencies. [USD/]

* Spot silver eased 0.1% to $20.27 per ounce, platinum fell 0.2% to $954.32, and palladium was steady at $2,277.13.

DATA/EVENTS (GMT)

0600 UK GDP Est 3M/3M June

0600 UK GDP Estimate MM, YY June

0600 UK Manufacturing Output MM June

0600 UK GDP Prelim QQ, YY Q2

0645 France CPI (EU Norm) Final MM, YY July

1200 India Industrial Output YY June

1230 US Import prices YY July

1400 US U Mich Sentiment Prelim Aug