Gold heads for third weekly rise on lower yields, virus woes

Gold prices held steady on Friday but were set for a third consecutive weekly gain as concerns over the fast-spreading Delta variant of Covid-19 and a drop in US Treasury yields supported bullion demand.

Spot gold was little changed at $1,801.12 per ounce by 10.33 am, but has risen 0.8 per cent so far this week.

US gold futures rose 0.1 per cent to $1,802.70.

"The new rise in the Delta variant is causing some concerns on global growth and the data out of the US started to ease off a little bit, which are helping gold," Stephen Innes, managing partner at SPI Asset Management, said.

"Real rates coming down is very supportive for gold. However, the dollar is holding up to a large degree and I think that in itself is limiting gold's move."

Benchmark US 10-year Treasury yields languished near a more than four-month low, reducing the opportunity cost of holding non-interest bearing gold.

Sentiment in wider equity markets remained fragile as the Delta variant threatened global economic recovery, sending Asian shares to a two-month low.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose unexpectedly last week, indicating that the labour market recovery continued to be choppy.

Minutes from the US Federal Reserve's June policy meeting released on Wednesday showed that while the economic recovery "was generally seen as not having yet been met," Fed officials agreed they should be poised to act if inflation or other risks materialised.

Fears of an imminent monetary policy tightening by the Fed have weighed on bullion, sending gold down 7 per cent in June.

Limiting gold's appeal, the US dollar rose 0.1 per cent on Friday towards a three-month high hit in the previous session.

Silver eased 0.2 per cent to $25.85 per ounce and was headed for a weekly drop.

Palladium fell 0.6 per cent to $2,789.29, while platinum rose 0.2 per cent to $1,077.35.