Gold edges down as hawkish central banks weigh

By Vijaykumar Vedala

BENGALURU (Reuters) - Gold inched lower on Friday as hawkish comments from major central banks suggested a shift toward tighter monetary policies, while the dollar nursed its losses.

Comments from top central bankers including European Central Bank head Mario Draghi, Bank of England Governor Mark Carney, and top policymakers at the Bank of Canada earlier this week have indicated that quantitative easing is being put back in its box and interest rates are going to go up.

Gold is highly sensitive to rising interest rates, which increase the opportunity cost of holding non-yielding bullion. However, losses in the dollar, in which it is priced, have been offsetting the impact of higher yields to keep gold range-bound.

Spot gold fell 0.2 percent to $1,242.56 per ounce, as of 0736 GMT. U.S. gold futures for August delivery were down 0.3 percent at $1,242.60 per ounce.

Gold slid nearly 2 percent in June in its first monthly decline this year, but gained about 8 percent so far in 2017.

Gold has been range-bound between $1,243-$1,248, and appears to be lacking a catalyst for price action in any direction, MKS PAMP analyst Tim Brown said in a note.

"Central banks seem to be moving toward a more hawkish view and the resulting rise in the bond yield curve is putting downward pressure on gold prices."

On Thursday, Germany's 10-year government bond yield rose to a seven-week high, and benchmark U.S. Treasury yields touched six-week highs on the likelihood that central banks in Europe will become less accommodative.

"Central banks worldwide are going to have some kind of less stimulative economic policies. About the pace of their exit strategies, the only question is regarding the matter of degree and not the direction itself," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

In the wider markets, the dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent after hitting a nine-month low at 95.470 on Friday. Asian shares were pulled down by weaker European and U.S. markets.

Among other precious metals, silver is up 4 percent for the year despite having shed over 9 percent in the second quarter. Spot silver slipped 0.2 percent to $16.55 per ounce on Friday.

Platinum dipped 0.2 percent to $917.90, and slipped nearly 3 percent this quarter, but is up about 2 percent for the year.

Palladium, which has been the best performing precious metal this year, dipped 0.4 percent to $844 per ounce. The metal surged nearly 25 percent this year, and is poised to have its best year since 2010.

(Additional reporting by Nithin Prasad in Bengaluru; Editing by Richard Pullin and Sherry Jacob-Phillips)