(Add comment, update prices)
* Dollar holds nearly four months
* SPDR Gold ETF is holding down more than 140 tons so far this year
* Gold could yield an average of $ 1,775 / ounce
March 26 (Reuters) – Gold prices rose slightly on Friday but a stronger dollar and a rise in U.S. Treasury yields put the metal on the course for its first weekly decline in three.
Spot gold rose 0.4% to $ 1,733.26 an ounce at 12:19 pm EDT (1619 GMT) but was down 0.7% this week. U.S. gold futures rose 0.4% at $ 1,732.60.
“Dips and rallies are being bought in (in the gold market) … there are clearly two definite sides of coins and this is the main area of focus,” said David Meger, director of metals. who trades at High Ridge Futures, said.
A stronger dollar and rising yields push gold as one side of the coin and coronavirus issues rise and the Fed’s low interest rate policy is being raised as another, Meger said, noting that it is not clear what the side that will eventually be there.
Gold’s moderate gains came despite a stronger dollar and an increase in benchmark yields, which have been attractive in recent times.
A stronger dollar makes holding a named green bullion more expensive for those with other currencies, while a higher yield raises the opportunity cost of the non-yielding metal.
However, “outside the short term, the macro background is expected to be supportive of gold as the dollar’s weakening trend begins and we expect a very negative outcome,” the analyst said. Suki Cooper’s General Charter in note.
In the short term, a macro catalyst doesn’t have gold to drive it higher but physical demand should limit it, she said, making an average of $ 1,775 in the second quarter.
The largest gold-backed trading fund, the SPDR Gold Trust, has flowed out of more than 140 tonnes so far this year.
Among other precious metals, silver rose 0.1% to $ 25.04, palladium rose 2.4% to $ 2,671.70 and platinum rose 2.4% at $ 1,174.89.
Reporting by Brijesh Patel and Nakul Iyer in Bengaluru Editing by Marguerita Choy and Nick Macfie