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

Published 15/08/2020, 01:34 am
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(Updates prices)

* Gold on course for more than 4% weekly fall

* We've gone a little too far, too fast -analyst

* Silver set to snap 9-week winning streak

* Investors await U.S.-China talks on Aug. 15

* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser

By Sumita Layek

Aug 14 (Reuters) - Gold fell on Friday, on track for 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 XAU= dipped 0.5% to $1,943.18 per ounce by 2:02 p.m. EDT (1453 GMT) and U.S. gold futures GCv1 settled down 1% at $1,949.80.

After hitting a record peak of $2,072.50 on Aug. 7 and rising over the previous nine weeks, bullion declined 4.5% 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. 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. US/ 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 XAG= shed 4.7% to $26.24 per ounce, set to snap a nine-week winning streak, down 7.2% so far.

Platinum XPT= fell 1.6% to $941.79 and palladium XPD= eased 2.4% to $1,949.40.

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