Gold extends dip on unexpected retail sales rise, higher yields

Gold prices fell on Friday as a rebound in US bond yields and a surprise increase in September retail sales dented the metal's appeal as a safe-haven asset.

Spot gold fell 1.5% to $1,769.60 per ounce by 9:51 a.m. EDT. US gold futures slipped 1.6% to $1,768.50.

"Gold has everything going against it. Real rates are rising, equities are higher, so is bitcoin," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

US retail sales unexpectedly increased in September, boosting equities, and extending losses in risk-hedge gold.

Raising gold's opportunity cost, US benchmark 10-year Treasury yields recovered from a more than one-week low hit on Thursday.

Gold rises to one-month high on dollar, yields retreat

"Expectations are growing that the Fed and other central banks are going to tighten their monetary policy, which should keep yields supported, and when yields rise gold tends to struggle," said Fawad Razaqzada, analyst with ThinkMarkets.

"Investors are, however, likely expecting only a moderate tightening from major central banks and that shouldn't cause too much of a problem for gold as investors hedge against elevated price levels."

While most Fed policymakers agree the central bank could start reducing its monthly bond purchases as soon as next month, they are sharply divided over inflation and what they should do about it.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.

Bullion remains on course for a small weekly gain as the dollar weakened, lowering gold's cost for buyers holding other currencies.

Spot silver fell 1% to $23.31 an ounce but was still headed for its biggest weekly gain in seven.

Platinum edged up 0.1% to $1,056.58, while palladium fell 1.5% to $2,097.47, with both on course for a weekly uptick.