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Gold set for fourth weekly gain as U.S. dollar under pressure

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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

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of holding non-interest-bearing gold.

* 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

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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.

* 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

(Reporting by Brijesh Patel in Bengaluru; Editing by Sherry

Jacob-Phillips)



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