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Gold set for worst week since March, pressured by high yields

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08/14/2020 | 10:29am EDT
FILE PHOTO: Gold bars at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna

Gold fell on Friday, on track to post its worst week since March, as an uptick in U.S. Treasury yields and a logjam over a U.S. stimulus bill to help the coronavirus-hit economy dented the metal's allure.

Spot gold dipped 0.3% to $1,946.56 per ounce by 10:53 am EDT (1453 GMT) and U.S. gold futures fell 0.8% to $1,953.80.

After hitting a record peak of $2,072.50 on Aug. 7 and rising over the previous nine weeks, bullion declined 4.3% this week.

"The gold market had been in a parabolic state, so when you throw a little pickup in yields along with the impasse on the stimulus bill, it was going to see a bit of a retracement," said David Meger, director of metals trading at High Ridge Futures.

"We might have gone a little too far, too fast, and we believe the market is in need of a pause, a consolidation. And that's exactly what we are seeing."

Poor economic data from far and wide, including disappointing U.S. retail sales, also did not help safe-haven gold.

The benchmark U.S. 10-year Treasury yield hovered near seven-week highs, while hopes for a fresh round of U.S. coronavirus relief faded as Congress went into recess.

Higher yields increase the opportunity cost of holding non-yielding assets such as bullion, which has climbed over 28% so far this year.

"We're going to hit the all-time highs again on the likelihood of a substantial stimulus package and the possibility of chaos around the election is going to drive people into a flight to safety," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

Among other metals, silver shed 2.6% to $26.83 per ounce, set to snap a 9-week winning streak, down 5.2% so far.

Platinum fell 0.2% to $955.32 and palladium eased 0.2% at $2,162.39.

By Sumita Layek

Stocks mentioned in the article
ChangeLast1st jan.
GOLD 0.37% 1954.244 Delayed Quote.29.17%
PALLADIUM 0.21% 2349 Delayed Quote.24.05%
SILVER 0.36% 27.139 Delayed Quote.52.39%
THE PLATINUM GROUP PUBLIC COMPANY LIMITED -0.82% 2.42 End-of-day quote.-40.69%
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