Gold price dips on rising yields; faces first weekly fall since July

New York (Aug 14) - Gold prices fell on Friday as a rally in U.S. treasuries and a steady dollar prompted a sell-off in bullion following a steep retreat from record peaks, setting it up for its first weekly decline since early July.  

Spot gold        dipped 0.2% to $1,948.27 per ounce by 1032 GMT. U.S. gold futures        fell 0.6% to $1,957.60 per ounce.

Having hit a record peak of $2,072.50 on Friday and posting gains in the previous nine weeks in a row, bullion has declined more than 4% so far this week.

"Everybody was eager for gold and the buying became so intense over the last few weeks that gold became overextended," said Robin Bhar, an independent analyst.

"Nothing goes up in a straight line ... (with the) over exuberance, things needed to correct, so we are now consolidating."

Gold prices are being pressured as the benchmark U.S. 10-year yield climbed to its highest since June 24, analysts said.    

Higher yields increase the opportunity cost of holding non-yielding assets such as bullion.

Gold also largely ignored economic data from top consumer China, which missed market expectations, and data showing the euro zone's economy recorded its deepest contraction on record in the second quarter.                        

Markets now await U.S. retail sales figures due at 1230 GMT for clues on the path to recovery from the pandemic-induced slowdown.

Investors are also keeping a close eye on developments on fragile China-U.S. relations, ahead of key talks on Aug. 15 and a stalemate in Washington over a new stimulus package.

"It could be the case that before the elections, there would be no further stimulus. Gold could then be lacking upward bimpetus that will imply the shorts or the profit-taking side will be winning momentum, pushing gold even lower," Bank of China International analyst Xiao Fu said.

In other markets, silver fell 3.4% to $26.62 per ounce, set to snap a 9-week winning streak, down 6% so far.

Platinum fell 1% to $947.66 per ounce and palladium was down by 0.5% at $2,156.28 per ounce.

Reuters