(Updates prices)
* Dollar holds close to over four-month peak
* SPDR Gold ETF holdings down over 140 tonnes so far this
year
* Gold could average $1,775/oz- Standard Chartered
By Nakul Iyer
March 26 (Reuters) - Gold prices gained slightly on Friday
but a stronger dollar and a rise in U.S. Treasury yields put the
metal on course for its first weekly decline in three weeks.
Spot gold XAU= edged up 0.3% to $1,732.11 per ounce by
1:45 p.m. EDT (1745 GMT) but it was down 0.8% this week. U.S.
gold futures GCv1 settled up 0.4% at $1,732.30.
"Dips are being bought and rallies are being sold into (in
the gold market) ... there are clearly two definitive sides of a
coin and this is the main focal point," David Meger, director of
metals trading at High Ridge Futures, said.
A firmer dollar and rising yields pressuring gold are one
side of the coin and rising coronavirus cases and the Fed's
low-interest rate policy lifting it are the other, Meger added,
noting it remains unclear which side will ultimately prevail.
Gold's modest gains came despite a firmer dollar and an
uptick in benchmark yields, which have weighed on its appeal
recently.
A stronger dollar makes holding greenback-denominated
bullion more expensive for those holding other currencies, while
higher yields raise the non-yielding metal's opportunity cost.
But, "beyond the near term, the macro backdrop is set to
remain supportive of gold as the dollar weakening trend resumes
and we expect real yields to remain negative," Standard
Chartered analyst Suki Cooper said in a note.
In the near term, gold lacks a macro catalyst to drive it
higher but physical demand should limit its downside, she added,
predicting it to average $1,775 in the second quarter. GOL/AS
The biggest gold-backed exchange traded fund, SPDR Gold
Trust HLDSPDRGT=XAU , has seen outflows of more than 140 tonnes
so far this year.
Among other precious metals, silver XAG= fell 0.1% to
$24.99, palladium XPD= gained 2.1% to $2,663.73 and platinum
XPT= was up 2.4% at $1,174.26.
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SPDR Gold ETF vs spot gold https://tmsnrt.rs/3fkrUVI
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