Gold on Friday lost 1.39 percent as a stronger US dollar and expectations of improving economies diminish demand for the haven asset.
On Friday, the US dollar index rose 0.59 percent to 90.847, its highest level in a week.
Meanwhile, a report showed that US personal incomes soared last month as COVID-19 relief checks helped recharge the US economy with the strongest spending advance in seven months.
Bullion has fallen more than 8 percent this year as traders focus on a recovery from the COVID-19 pandemic and higher US Treasury yields, which make the metal less competitive because it does not offer interest. That has caused holdings in bullion-backed exchange-traded funds to fall to their lowest since July last year.
Gold “is having a rough 2021 and the only thing that can right the ship is if central banks thwart the trajectory of bond yields,” Oanda Corp senior market analyst Edward Moya said. “The Fed will have plenty of opportunities to stem surging Treasury yields, but for now it seems they can be a little more patient.”
US Federal Reserve Chairman Jerome Powell this week assured investors that the central bank is in no rush to pull back stimulus, boosting demand for many raw materials, while further reducing the appeal of gold as a haven asset.
Powell called the recent run-up in bond yields “a statement of confidence” in the economic outlook.
Bullion declined further on Friday as traders exited positions, with US equities trading mixed and global bond rout easing.
“Gold got hit aggressively just after the cash equities open[ed] today,” BMO Capital Markets head of metals derivatives trading Tai Wong said, adding that investors sold their holdings after the metal failed to maintain the key levels of US$1,760 to US$1,765 an ounce in overnight trading.
Spot gold ended Friday at US$1,734.38 per ounce, down 2.79 percent for the week.
Additional reporting by staff writer
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