Gold faces fourth monthly drop as firm dollar, U.S yields weigh

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Gold faces fourth monthly drop as firm dollar, U.S yields weigh

Author of the article:

Reuters

Gold prices were set on Friday for a

fourth consecutive monthly drop, pressured by strong

performances in the greenback and U.S. bond yields and

aggressive monetary policies from top central banks.

Spot gold inched up 0.2% to $1,758.94 per ounce, as

of 0337 GMT. U.S. gold futures rose 0.3% to $1,775.10.

Gold remains inversely correlated to the dollar and yields,

rather than being a gold story in itself, OANDA senior analyst

Jeffrey Halley said, adding that their recent dips provided some

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support to bullion this week.

The metal is set for its best week since mid-May, with

prices up 1.9% so far. However, bullion is unlikely to stave off

its worst run of monthly losses since November 2020.

The dollar has spent most of July hovering around

20-year highs, hammering demand for greenback-priced gold among

other currency holders.

The U.S. Federal Reserve on Wednesday hiked interest rates

by three-quarters of a percentage point as it attempts to fight

soaring inflation.

Benchmark U.S. 10-year Treasury yields firmed after hitting

a three-month low on Thursday. Higher rates and bond yields

increase the opportunity cost of holding non-interest bearing

gold.

“Although bullion saw a sell-off below $1,700 (earlier this

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month) it is significant that long-term support at $1,675/80 was

tested and held. Gold has been trying to form a bottom since,”

helped by recent signs of a U.S. recession, Halley said.

The U.S. economy unexpectedly contracted in the second

quarter, raising risks of an economic slowdown, which lifted

gold’s safe-haven allure and helped bullion prices gain more

than 1% on Thursday.

Spot silver firmed 0.3% to $20.04 per ounce, while

platinum eased 0.2% to $886.24. Both face monthly losses.

Palladium rose 0.8% to $2,095.13, and has gained

about 8.2% this month, its best since January.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Sherry Jacob-Phillips)

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