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PRECIOUS-Gold firms as weak retail sales data hurt U.S. dollar, yields

Published 14/05/2021, 16:23
Updated 14/05/2021, 16:24
© Reuters.

© Reuters.

* Palladium heads for biggest weekly decline since February
* Gold eyes second straight weekly gain
* India physical gold discounts widen as pandemic dulls
demand

(Recasts, adds comments, updates prices)
By Eileen Soreng
May 14 (Reuters) - Gold extended gains on Friday, as the
dollar and U.S. Treasury yields pulled back after U.S. retail
sales unexpectedly stalled in April.
Spot gold XAU= rose 0.6% to $1,837.25 per ounce by 1503
GMT, heading for second week of gains. U.S. gold futures GCv1
climbed 0.7% to $1,836.10.
"After a long period of (data) beating expectations, it's
quite likely we're going to maybe have some disappointments like
we did today, or with the payrolls (data). And that could
ultimately move the yield curve lower and help gold," said Bart
Melek, head of commodity strategies at TD Securities.
Gold could "start hitting technical levels around $1,850,
that could propel it significantly higher," Melek added.
The yield on benchmark 10-year U.S. Treasury notes
US10YT=RR fell, bolstering appeal for non-yielding gold. The
dollar index .DXY shed 0.5% after a report that April U.S.
retail sales unexpectedly stalled, making bullion cheaper for
those holding other currencies. USD/ US/
Key U.S. economic readings this week showed a
bigger-than-expected rise in consumer prices and weekly jobless
claims dropping to a 14-month low, intensifying concerns over
rising inflation and prospects of higher interest rates.
Federal Reserve officials, however, have maintained they
expect any rise in inflation to be short-lived, while pledging
to keep rates low until the economy reaches full employment.
"The Fed is not going to throw the economic recovery off
course by raising rates," StoneX analyst Rhona O'Connell said.
"There's too much risk involved to start either aggressive
tapering or raising rates because there is not enough underlying
strength in the economy."
"We've got global issues, and particularly with
uncertainties over places like Brazil and India."
India's tally of coronavirus infections climbed past 24
million on Friday, with widespread restrictions also taking a
toll on physical gold demand. GOL/AS
Elsewhere, palladium XPD= rose 0.8% to $2,885.01 per ounce
but was headed for its biggest weekly decline since
February-end.
Both silver XAG= and platinum XPT= were up 0.9% at
$27.30 and $1,216.75 per ounce, respectively.


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