Gold trimmed a weekly gain as inflation-adjusted bond yields continued to advance, diminishing the appeal of the non-interest bearing asset. On Friday, bullion sunk to a key resistance level as market-based measures of inflation expectations rapidly dropped, raising the real return of Treasuries. A decline in the bond’s nominal yields from a two-year high had helped gold advance earlier in the week. The moves in the bond market come ahead of a widely anticipated meeting by the Federal Reserve next week. Officials have already raised the prospect of multiple rate hikes this year to curb inflation, which in December was the hottest in 40 years. U.S. Treasury Secretary Janet Yellen said Thursday she continues to forecast inflation falling close to 2% by the end of 2022. Gold has managed to hold steady in 2022 even as central banks turn more hawkish. Volatility in the stock market has helped spur demand for the haven, with the S&P 500 on course for its worst week in almost 15 months. Mounting geopolitical tensions between the U.S. and Russia may also be providing some support “We still expect broad U.S. dollar strength, moderating inflation, and rising real yields to weigh on gold over the course of 2022, dragging its price down to $1,650 an ounce by year-end” analysts at UBS Group AG wrote in a note. Spot gold slipped 0.3% to $1,833.35 an ounce by 9:66 a.m. in London but is on track for a 0.8% gain this week. The Bloomberg Dollar Spot Index fell 0.1% after climbing 0.2% in the previous session. Silver retreated, platinum was little changed and palladium gained.
