Gold edges down, set for biggest weekly drop in 2 months

BENGALURU: Gold fell on Friday and was set for its biggest weekly loss in two months as investors sought higher returns from a firmer U.S. dollar and rising Treasury yields, and ahead of U.S. non-farm payrolls data later in the day.

Spot gold edged 0.2 percent lower to $1,221.76 per ounce at 0706 GMT. It has dropped 1.6 percent this week and is set for its biggest weekly fall since the week of May 5.

U.S. gold futures for August delivery fell 0.2 percent to $1,221.30 per ounce.

"We are somewhat concerned about gold's ability to hold up and see more weakness that could set in, especially if Friday's payroll number sets off another spike in U.S. yields," INTL FCStone analyst Edward Meir said in a note.

Higher yields seem to be the prime negative driver in gold for the moment, he added.

Dollar-denominated bullion typically loses value when the greenback and U.S. Treasury bond rates rise since the yellow metal does not bear interest.

Investors are looking ahead to the monthly U.S. employment data later on Friday after downbeat private payroll figures overnight pointed to some loss of momentum in job growth as the labor market nears full employment.

"The primary focus will be on the wage growth component given the Fed's overriding concern about inflation," said Stephen Innes, head of trading for Asia Pacific at OANDA in Singapore, adding "the G-20 summit should not be ignored."

Spot gold may fall into a range of $1,204 to $1,211 an ounce, as suggested by its wave pattern and a Fibonacci projection analysis, according to Reuters technical analyst, Wang Tao.

"Gold has been weighed down by overall bearish sentiment toward the sector, with a spike higher in bond yields over the last fortnight contributing to the soft tone," said Jordan Eliseo, chief economist at gold trader ABC Bullion.

U.S. Treasury yields rose on Thursday, with benchmark yields touching nearly eight-week highs, while the dollar gained in Asian trading on Friday.

Silver fell 0.6 percent to $15.90 per ounce.

Earlier in the session, the white metal touched $14.86 an ounce, its lowest in 15 months in what appeared to have been driven by an accidental order, according to traders. It is down 4.2 percent on week.

Palladium climbed 0.3 percent to $837.25 per ounce after hitting its lowest since June 2 earlier in the session.

Platinum fell 0.7 percent to $903.70 per ounce. It is down about 2 percent for the week so far.