Gold kept in a narrow range by strong U.S. yields

Gold prices inched up on the back of a weak dollar on Friday, but elevated U.S. Treasury yields set the metal on track for its biggest weekly decline in over a month as traders braced for sooner-than-anticipated U.S. rate hikes

Spot gold rose 0.2% to $1,792.13 per ounce by 5:28 a.m. ET, trading in a narrow $7 range, and was on course for a weekly drop of about 2%, the biggest since the week of Nov. 26. U.S. gold futures rose 0.2% to $1,792.50

Providing some respite to bullion, the dollar retreated slightly on Friday but was still on course to gain over the week before the release of U.S. labor data due at 1330 GMT

“For the past few months, gold has been trading between $1,730 and $1,830, and that’s been the range pretty much for the last six months or so,” said Michael Hewson, chief market analyst at CMC Markets UK

“Gold has been very much a hostage to what U.S. yields have been doing, and it’s likely to continue to be so. So, if we get a decent jobs report today, that could exert downward pressure on gold prices towards $1,770

Benchmark U.S. 10-year Treasury yields steadied near their strongest level since March 2021

“Markets are increasingly pricing in an aggressive Fed … the whole prospect of Fed trying to control an inflation outbreak is obviously lifting yields,” IG Markets analyst Kyle Rodda said

While a dollar decides how cheap or expensive gold gets for buyers holding other currencies, the metal is also highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion

Spot silver was little changed at $22.16 per ounce, platinum rose 0.5% to $969.01 per ounce and palladium rose 1.7% to $1,905.84 per ounce