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Gold Down, but Looks to Third Weekly Gain, as U.S. Bond Yields Retreat

CommoditiesOct 28, 2021 23:50
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© Reuters.

By Gina Lee

Investing.com – Gold was down on Friday morning in Asia, but set for a third consecutive weekly gain. Retreating U.S. bond yields and a dollar headed for a third weekly decline helped to cap losses for the yellow metal.

Gold futures were down 0.28% to $1,797.55 by 11:44 PM ET (3:44 AM GMT) but gained 0.3% so far this week. The dollar, which usually moves inversely to gold, inched up on Friday but headed for a third weekly decline.

Benchmark 10-year U.S. Treasury yields were set for their biggest weekly decline since early September 2021. Investors are now calculating what the furious flattening of the U.S. yield curve suggests about expectations for economic growth and the rate at which the U.S. Federal Reserve could tighten monetary policy as inflation continues to rise.

U.S. data released on Thursday showed that the GDP grew a smaller-than-expected 2% quarter-on-quarter, while the GDP price index grew 5.7% quarter-on-quarter, in the third quarter of 2021. Separate data showed that 281,000 initial jobless claims were filed throughout the week.

Investors now await the Fed’s policy decision, due to be handed down on Nov. 3, while the European Central Bank (ECB) handed down its decision on Thursday. Although ECB President Christine Lagarde acknowledged higher inflation, she pushed back against market bets that inflationary pressures would trigger an interest rate hike as soon as 2022.

Meanwhile, investors have also trimmed their gold price forecasts for the rest of 2021 and into 2022, according to Thursday’s Reuters poll.

In other precious metals, silver was down 0.3% and was set for its worst week since mid-September 2021. Platinum inched down 0.1% while palladium edged up 0.2%. However, forecasts for palladium and platinum prices were also lowered in a separate Reuters poll, with a chip shortage forcing automakers to cut production of vehicles containing the metals.

Gold Down, but Looks to Third Weekly Gain, as U.S. Bond Yields Retreat
 

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