Gold hits over 2-year low as demand falls

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Gold prices on Friday tumbled to their lowest in more than two years as a rise in U.S. Treasury yields and a stronger dollar dented demand for the safe-haven metal.

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Spot gold was down 1.4% at $1,890.56 per ounce by 0836 GMT, after earlier touching its weakest since February 2019 at $1,884.61. U.S. gold futures fell 1.3% to $1,890.

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A rise in benchmark 10-year Treasury yields above 1.6% this week has spurred selling in gold as it makes non-yielding bullion less attractive.

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A firmer dollar, in which gold is priced, also weighed on prices by making the metal more expensive for holders of other currencies.

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"The rise in Treasury yields and a stronger U.S. dollar are both weighing on gold," said Jeffrey Halley, senior market analyst at OANDA.

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"The move above $1,900 an ounce this week now seems to be a false dawn as the market ponders where next for rates and the dollar."

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A higher inflation outlook on expectations of more stimulus spending by U.S. President Joe Biden's administration has lifted Treasury yields, which move inversely to prices.

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"The rise in bond yields is capping gains in gold. 

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But the underlying tone for bullion remains positive as investors seek refuge in safe-haven assets amid concerns about inflation," ANZ analysts said in a note.

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