Gold prices brace for biggest weekly decline in five

Gold prices held near two-week lows on Friday after strong U.S. economic data spurred the dollar and bond yields in a high-interest rate environment that dragged the non-interest-bearing metal towards its biggest weekly decline in five.

Spot gold was up 0.3% at $1,951.19 per ounce by 0249 GMT, after earlier hitting its lowest level since July 12 and ending 1.4% lower in the previous session. Bullion has declined 0.4% so far in the week, heading for its biggest weekly fall since June 23.

U.S. gold futures rose 0.2% to $1,950 per ounce.

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The higher drift in gold prices lacks conviction as there is still indecision at play in the lead-up to the upcoming Bank of Japan meeting as chatters that it will discuss tweaking its yield curve control policy has kept market participants on their toes, said Yeap Jun Rong, a market strategist at IG.

“Any confirmation of an adjustment at the upcoming meeting will bring about upside risks to global bond yields and weigh on the non-yielding yellow metal further.”

Asian stocks were off five-month highs, and the yen extended a sharp rally amid speculation the Bank of Japan will keep ultra-low interest rates on Friday, but may make minor tweaks to extend the lifespan of its yield control policy.

The U.S. dollar index and benchmark 10-year Treasury yields head near Thursday’s highs reached after data showed the U.S. economy grew faster than expected in the second quarter, potentially keeping a much-feared recession at bay and increasing the likelihood that the Fed could further hike interest rates.

Higher U.S. interest rates and Treasury bond yields raise the opportunity cost of holding gold.

Analysts slightly lowered their gold price forecasts for this year, a Reuters poll showed. Global economic concerns also drove down platinum and palladium forecasts for 2024.