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PRECIOUS-Gold set for worst week in four on strength in dollar, yields

PRECIOUS-Gold set for worst week in four on strength in dollar, yields

· 02/05/2021 06:33
PRECIOUS-Gold set for worst week in four on strength in dollar, yields

Dollar set for best week in three months

Silver down 1.5% for the week

Platinum, palladium face best week in five

Adds analyst comment, updates prices

By Asha Sistla

- Gold rose on Friday, but was set for its worst weekly dip in four as investors continued to bank on the dollar with U.S. Treasury yields also gaining.

Spot gold XAU= rose 0.8% to $1,807.10 per ounce by 1059 GMT, after falling to its lowest since Dec. 1 on Thursday. U.S. gold futures GCv1 gained 0.9% to $1,807.80.

Gold's initial dip below the $1,800 level infused some buying interest, evidenced by inflows into exchange traded funds (ETF), Commerzbank analyst Carsten Fritsch said in a note.

The SPDR Gold Trust GLD, the largest gold-back ETF, saw its highest inflows since Jan. 15, on Feb. 4. GOL/ETF

But for the week, gold has shed 2.2% so far, which would be its biggest decline since the week ended Jan. 8.

"Gold is getting clobbered," said CMC Markets UK's chief market analyst Michael Hewson, adding higher yields in U.S. Treasuries are much more attractive than holding money in gold.

The dollar .DXY was set for its best week in three months, while U.S. Treasury yields also rose. USD/ US/

Gold's status as a hedge against inflation from widespread stimulus has been challenged by higher yields because they increase the opportunity cost of holding non-yielding bullion.

Gold could endure some "serious short-term pain" but its role as an inflation hedge could return as the economic recovery starts accelerating by late second-quarter, Jeffrey Halley, a senior market analyst at OANDA said.

"Silver's fate will be similar to gold and it can retest $22 over the next two weeks, although it'll find some support through Biden's solar push."

Spot silver XAG= rose 1.2% to $26.60 an ounce, but was down 1.5% this week. Prices have shed over 11% since scaling a multi-year peak of $30.03 on Monday propelled by a GameStop-style retail frenzy. nL8N2K84DQ

Platinum XPT= added 1.3% to $1,111.55 and palladium XPD= gained 1.5% to $2,317.68, with both metals headed for their best week in five.

(Reporting by Asha Sistla and Sumita Layek in Bengaluru;Editing by Elaine Hardcastle)

((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: asha.sistla.thomsonreuters.com@reuters.net))