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

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

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

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)