Gold heads for third weekly gain on lower yields, weaker dollar

Gold edged higher on Friday and was on track to register a third straight weekly gain supported by a weaker dollar and lower US Treasury yields, while investors awaited a US Federal Reserve policy meeting next week.

Spot gold rose 0.4% to $1,790.65 per ounce by 1156 GMT, having jumped to its highest since Feb. 25 at $1,797.67 on Thursday, and has gained 0.8% so far this week.

US gold futures rose 0.4% to $1,789.40.

"The focus is turning to the Fed as in recent times we have seen significant improvement in US data. That's raising speculation that the Fed might signal its intention to reduce its emergency stimulus measures in the coming months," said Fawad Razaqzada, market analyst with ThinkMarkets.

"There's an element of hesitation as people are just waiting to see what the Fed says before decisively stepping in on the long side."

US 10-year Treasury yields eased to 1.54%, while the dollar fell 0.3%.

The Fed's next meeting ends on April 28, and while no major policy changes are expected, investors are paying close attention to any comments on possible scaling back of monetary easing in the future.

"The upcoming rise in inflation in April-May 2021 will most likely keep gold prices supported in the near term," Fitch Solutions said in a note.

"However, prices will find strong resistance at the $1,850/oz level and will struggle to break above this level as inflation pressures will be temporary in our view."

Palladium rose 1.5% to $2,880.40 per ounce but was off a record $2,891.50 hit on Thursday. Many analysts expect a further run towards $3,000 as automakers ramp up purchases of the metal, worsening a supply shortage.

Silver added 0.2% at $26.22, and was set to gain for third straight week.

Platinum ose 2.2% to $1,229.23.