Gold set for 5th weekly fall on dollar rally, rate hike fears

July 15 (Reuters) – Gold prices steadied on Friday, with bullion on course for a fifth straight weekly decline as a relentless surge in the dollar and fears of aggressive US interest rate hikes weighed on demand.

FUNDAMENTALS

* Spot gold inched up 0.1% to USD 1,711.26 per ounce by 0116 GMT. US gold futures firmed 0.1% to USD 1,708.00.

* Gold prices are down 1.8% this week.

* The dollar was perched near 20-year highs, suppressing demand for greenback-priced bullion among buyers holding other currencies. A strong dollar sent gold down more than 2% in the previous session.

* However, the benchmark US 10-year Treasury yield edged lower, slightly buoying zero-yield gold.

* Two of the Fed’s most hawkish policymakers on Thursday said they favored another 75-basis-point interest rate increase at the US central bank’s policy meeting this month, not the bigger rate hike traders had raced to price in after a report Wednesday showed inflation was accelerating.

* Higher interest rates raise the opportunity cost of holding non-yielding bullion.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.28% to 1,016.89 tonnes on Thursday, from 1,019.79 tonnes on Wednesday.

* Spot silver was flat at USD 18.38 per ounce, but has fallen about 4.8% in what could be its seventh straight weekly loss.

* Platinum was little changed at USD 843.33. It has dropped about 6% this week, potentially its worst in at least three months.

* Palladium firmed 0.4% to USD 1,903.67. It has lost about 12.8% this week, the most since November.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Amy Caren Daniel)