PRECIOUS-Gold falls 1% as dollar accelerates rally

  • Reuters
  • Commodities News
PRECIOUS-Gold falls 1% as dollar accelerates rally
Credit: © Reuters.

(Updates prices)

* Powell sees no reason to alter Fed's accommodative stance

* Platinum falls as much as 4.4%, silver down 3.8%

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa

By Shreyansi Singh

Jan 15 (Reuters) - Gold prices fell more than 1% on Friday and the metal was heading for a second straight weekly drop as the dollar continued its upturn, overshadowing bullion's appeal as an inflation hedge after the U.S. president-elect proposed a new $1.9 trillion stimulus package.

Spot gold XAU= was down 1% at $1,827.90 per ounce by 1:49 p.m. EST (1849 GMT), having earlier declined as much as 1.3%, while U.S. gold futures GCv1 settled down 1.2% at $1,829.90.

The dollar index was on track for its biggest weekly gain since October 2020, making bullion more expensive for holders of other currencies. USD/

"Bouts of dollar strength and the uptick in U.S. yields have triggered short-term corrections," said Standard Chartered (LON: STAN ) Analyst Suki Cooper.

"The gold market is caught between longer-term buying on the back of rising inflation expectations given stimulus measures, but selling as the dollar has bounced and concern over QE tapering materialised."

Benchmark 10-year Treasury yields US10YT=RR held close to near 10-month highs touched earlier in the week. USD/ US/

"The Biden administration should support a much more expansive spending agenda than before," said Tai Wong, head of base and precious metals derivatives trading at BMO.

"But it seems like the stubborn short-term resilience of the dollar and concern for even higher yields is triggering steady liquidation in gold."

U.S. President-elect Joe Biden on Thursday outlined a $1.9 trillion stimulus package proposal. Biden takes office next Wednesday. gold is considered a hedge against the inflation and currency debasement that can result from widespread stimulus, a recent jump in bond yields has challenged that status as it increases the opportunity cost of holding non-yielding bullion.

On the technical front, gold has solid support around $1,775, and a dip to that level could trigger buying again, said Michael Matousek, head trader at U.S. Global Investors.

Silver XAG= fell 3.1% to $24.74 an ounce, having earlier dipped as much as 3.8%.

Platinum XPT= dipped 3.6% to $1,078.21, having declined 4.4% earlier, while palladium XPD= shed 0.7% to $2,391.77.

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