Gold set for first weekly drop in three as yields, dollar strengthen

Gold set for first weekly drop in three as yields, dollar strengthen

Gold prices slipped on Friday, pressured by the strength in U.S. Treasury yields and the dollar, which also put bullion on course for its first weekly loss in three.

Spot gold was down 0.1% at $1,949.33 per ounce, as of 0242 GMT. U.S. gold futures were up 0.2% at $1,952.00.

"The outlook for gold is subdued as rising rates obviously weigh, but until we break the trading range (between $1,930 to under $2,000) in a convincing manner ... we really don't have much of a direction for gold," said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

Benchmark U.S. 10-year Treasury yields extended gains as Federal Reserve officials took a hawkish tone on tightening policy, cementing the view that the U.S. central bank will hike interest rates aggressively as it fights soaring inflation.

Gold is highly sensitive to rising U.S. short-term interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion. A stronger U.S. dollar could also pressure gold, while on the other hand, the geopolitical uncertainty remains a support and the gold price is stuck in the middle of those two conflicting currents, McCarthy said.

A firmer dollar makes greenback-priced gold less attractive for overseas buyers.

Gold is down about