Gold prices held near two-week lows on Friday after strong U.S. economic data spurred the dollar and bond yields in a high interest rate environment that dragged the non-interest bearing metal towards its biggest weekly decline in five.
FUNDAMENTALS
* Spot gold was up 0.2% at $1,948.24 per ounce by 0126 GMT, after earlier hitting its lowest level since July 12 and ending 1.4% lower in the last session. It has declined 0.5% so far in the week, heading for its biggest weekly fall since June 23.
* U.S. gold futures rose 0.1% to $1,947.30 per ounce.
* The U.S. dollar index and benchmark 10-year Treasury yields were underpinned after data showed the U.S. economy grew faster than expected in the second quarter, potentially keeping a much-feared recession at bay and increasing the likelihood that the Fed could further hike interest rates.
* Higher U.S. interest rates and Treasury bond yields raise the opportunity cost of holding gold.
* Top central banks continued with another round of rate hikes this week despite cooling inflation, but have now switched in unison to a more cautious posture about further moves in a sign that a year-long round of global monetary tightening could be at an end. * The Fed and the European Central Bank delivered quarter-percentage-point rate increases this week, as expected, while the Bank of Japan is set to keep ultra-low interest rates on Friday but may make minor tweaks to extend the lifespan of its yield control policy.
* Analysts slightly lowered their gold price forecasts for this year, a Reuters poll showed. Global economic concerns also drove down platinum and palladium forecasts for 2024.
* Other precious metals were set for weekly declines as well. Spot silver steadied at $24.14, platinum held at $936.33, and palladium rose 0.1% to $1,241.28.