(March 24): Gold steadied into a tight range on Friday (March 24) after a volatile week so far as support from lower US yields countered a firm dollar, but bets for a pause in US rate hikes brightened the outlook for zero-yield bullion.
Spot gold was little changed at US$1,996.19 per ounce at 1202 GMT, holding a relatively narrow US$20 range. US gold futures rose 0.1% to US$1,997.50.
Prices gained in the last two sessions after the Federal Reserve raised rates by an expected quarter of a percentage point, but signalled it was on the verge of pausing.
Lower rates burnish appeal for bullion, which pays no interest.
The strong dollar is offsetting support for gold from the decline in yields, but "economic fears will result in lower interest rate expectations, which could continue to boost gold further," said Craig Erlam, senior market analyst at Oanda.
US 10-year Treasury yields fell for the third straight session, while the dollar index rose 0.7%.
Commerzbank raised its year-end gold forecasts to US$2,000, joining similar upward revisions by Goldman Sachs, Citi and ANZ.
In physical markets, Indian gold dealers were forced to offer the steepest discounts in over a year to lure buyers put off by a surge in local prices, while China saw steady safe-haven buying Silver rose 0.4% to US$23.22 per ounce, and headed for a second straight weekly gain.
"We see silver outperforming gold over the next six to 12 months owing to its general leverage to precious metals bull markets, but also its higher exposure to a recovering China, solidly growing India, and its exposure to solar-related consumption growth," Citi said in a note.
Platinum slipped 1.9% to US$965.94, while palladium dropped 1.8% to US$1,404.45.
"We favour platinum over palladium, as we expect platinum to benefit from supply disruptions in South Africa and ongoing substitution in autocatalysts," UBS analyst Giovanni Staunovo said.