METALS : Gold Closes Slightly Higher as Treasury Yields Fall

By David Hodari and Amrith Ramkumar

Gold prices swung between small gains and losses before closing slightly higher Friday, helped by a drop in Treasury yields.

Front-month gold for May delivery closed up 0.2% to $1,290.20 a troy ounce on the Comex division of the New York Mercantile Exchange but still capped off its worst week of the year. Bets on higher interest rates have pushed up Treasury yields and the dollar recently, hurting gold because a stronger dollar makes the precious metal more expensive for overseas buyers, and higher bond yields make gold less attractive to some investors.

On Friday, the WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, added 0.2% to hit a fresh year-to-date high. But the yield on the benchmark 10-year U.S. Treasury note edged down from its highest level since 2011.

Even though gold hit its lowest level of the year this week, some analysts expect the dollar's recent rally to cool moving forward as economic data moderates in the U.S. and growth momentum shifts back abroad.

Steady haven buying and investors hedging against inflation kept gold above $1,300 and in a tight range despite the interest-rate worries entering this week.

Investors were keeping on eye on the latest news from Italy, where two antiestablishment parties finalized a coalition agreement that challenges the constraints of the euro, setting up a possible fight with European leaders who only recently steered the common currency through a deep crisis.

"We expect longer-term holders/consumers to build a floor for the yellow metal even if it remains shunned by active money managers hunting for more attractive near-term returns," ING analysts said in a note to clients.

Analysts are tracking economic data and speeches from central-bank officials for clues about whether the Federal Reserve might raise rates three more times this year, compared with its previous projection of two.

Among base metals, front-month copper for May delivery declined 0.8% to $3.0510. Worries about an economic slowdown in China, the world's largest consumer of copper, and steady supply data have sent prices down 7% in 2018 after they hit a nearly four-year high in late December.

Write to David Hodari at [email protected] and Amrith Ramkumar at [email protected]