Gold steadies as weak U.S. data offsets firmer dollar

Jan 14 (Reuters) – Gold steadied on Friday as weak U.S. retail sales data countered pressured from an uptick in the dollar and Treasury yields, with overall weakness in the dollar keeping bullion on course for its best week since mid-November.

Spot gold was unchanged at $1,821.66 per ounce by 10:45 a.m. ET (1545 GMT). U.S. gold futures rose 0.1% to $1,822.60.

Gold gained briefly after the release of data showing retail sales tumbled by 1.9% in December as Americans struggled with shortages of goods due to supply chain bottlenecks and an explosion of COVID-19 infections. read more

Gold is acting a placeholder in people’s portfolios “until the dust settles” in terms of where the economy is going, said Philip Streible, chief market strategist at Blue Line Futures in Chicago.

The weak data this week could eventually either cause a selloff in wider markets or prompt the Federal Reserve to curb rate hike expectations, and gold gets a tailwind either way, Streible added.

However, benchmark U.S. 10-year Treasury yields and the dollar firmed (.DXY), making bullion costlier for overseas buyers.

Overall declines in the dollar this week put bullion on track for a weekly gain of about 1.4%, its biggest percentage rise in nine weeks.

Gold is considered a hedge against surging inflation, but interest rate hikes translate into higher opportunity cost of holding non-yielding bullion.

Considering that markets will ultimately remain intensely focused on the Fed’s exit, fewer sources of upside flow in the coming weeks could leave gold prices vulnerable to a consolidation, TD Securities said in a note.

Spot silver rose 0.5% to $22.96 an ounce, and was en route to post its best week in two months.

Platinum was up 0.6% at $975.74 and was set to gain about 2% this week, while palladium was unchanged at $1,888.22 and poised for a weekly drop of nearly 3%.

Reporting by Kavya Guduru in Bengaluru; Editing by Amy Caren Daniel

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