Gold heads for weekly rise on subdued US Treasury yields, dollar

Gold heads for weekly rise on subdued US Treasury yields, dollar

Gold was little changed on Friday but was set to post a third straight weekly gain after U.S. President Joe Biden's proposal to hike capital gains tax weighed on U.S. Treasury yields, while a weaker dollar also supported.

Spot gold was steady at $1,783.24 per ounce by 0723 GMT. The metal jumped to its highest since Feb. 25 at $1,797.67 on Thursday, and has added about 0.4% so far this week.

U.S. gold futures rose 0.2% to $1,785.60 per ounce.

"The knock-on effect from the tax hike (proposal) is attracting bond investors and the yields have dropped, and this is providing a little bit of lift-off for gold," said Stephen Innes, chief global market strategist at financial services firm Axi.

"The big question now facing gold markets is a decision on how the U.S. Federal Reserve is going to play next week."

The U.S. 10-year Treasury yield ticked lower on news that Biden will roll out a plan to raise taxes for high earners.

A subdued dollar also raised gold's appeal for other currency holders.

Underlining a revival in Asian bullion demand, shipments to India leapt to their highest since 2013, driving Swiss gold exports to a 10-month high.

Despite signs of strong pent-up demand for physical gold in India, rising coronavirus cases and renewed lockdown measures are threatening to kill off that revival, ANZ analysts wrote in a note.

India recorded the world's highest daily tally of COVID-19 infections on Thursday.

Palladium rose 0.4% to $2,847.63 per ounce but was off a record $2,891.50 hit on Thursday. Many analysts expect a further run towards $3,000 as automakers ramp up purchases of the metal, worsening a supply shortage.

Silver was down 0.4% at $26.06 per ounce, but set for a third straight weekly gain.

Platinum gained 0.5% to $1,209.11.

 

(Reporting by Shreyansi Singh in Bengaluru; Editing by Shailesh Kuber and Emelia Sithole-Matarise)