Gold on course for monthly decline as dollar firms

Gold prices were range bound on Friday and on track to post a weekly and monthly decline as a stronger dollar dented the precious metal's appeal.

Spot gold was up 0.1% at $1,842.58 per ounce by 0326 GMT. Prices were down 0.5% for the week and 2.8% for the month. US gold futures rose 0.2% to $1,844.20.

"Gold is largely going to continue to tread water as it is waiting for a proper catalyst," said Michael McCarthy, chief market strategist at CMC Markets.

The dollar rose 0.2%, making bullion expensive for holders of other currencies.

"Dollar has become the current safe-haven favourite," Phillip Futures said in a note.

The greenback has risen 0.8% this month helped by higher US Treasury yields and concerns that President Joe Biden's fiscal spending package will not be as large as the proposed $1.9 trillion.

Higher Treasury yields elevate demand for the dollar as it is used to buy bonds. "The short-term fundamentals have currently turned unfavourable towards gold as dollar strengthened because of unwinding stocks bets in the U.S," Phillip Futures said

Investor remain focussed on the US stimulus deal as analysts warn that a smaller stimulus or delay in getting the aid passed could weigh on gold prices.

Silver dropped 0.6% to $26.21 an ounce, having gained 4.5% on Thursday after some traders moved to cover short positions on rumours about a GameStop-style squeeze driven by retail investors.

However, the metal is up 3.1% for the week, its best weekly performance in nearly one-and-a-half months.

The steadier nature of commodity markets at the moment might be less attractive to retail day traders, said CMC Markets' McCarthy.

Platinum was flat at $1,070.81, but was set to register its worst week in seven.

Palladium rose 0.2% to $2,338.86, but was down 4.4% for the month, its biggest monthly decline since April last year.