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Gold prices rise, head for weekly gain above $1,800

Gold prices headed for a second straight gain as bullion extended its bounce from its lowest intraday price in a week which was prompted by rising bond yields and a higher U.S. dollar after hotter-than-expected U.S. inflation data.

June gold
GCM21,
+0.67%

GC00,
+0.67%

tacked was up $13.90, or 0.8%, to reach $1,837.90 an ounce on Comex, following a gain of nearly 0.1% on Thursday. Earlier in the week, gold touched its lowest intraday level since May 6 before punching higher, according to FactSet data.

Gold has been torn between the prospect of higher inflation, with evidence of pricing pressures building in consumer and producer-price data, but the chance of the Federal Reserve being forced to lift interest rates to cool the economy has checked bullion’s moves somewhat, some analysts have said.

“Higher interest rates tend to be bad for gold, but rising inflation is good, so the market is in a bit of a tussle to see where real rates are going.,” wrote Neil Wilson, chief market analyst at Markets.com, in a daily note.

“With the Fed still seen keeping its thumb firmly pressed on shorter-dated yields, rising inflation expectations would tend to support the bull case for gold,” he wrote.

Looking ahead Friday, investors will watch for a report on U.S. retail sales, which could influence gold prices on the day.

Economists expect a 0.8% rise in retail sales for April, after a 9.8% jump thanks to pent-up demand in March. Excluding autos, sales are forecast to rise 0.6% after an 8.4% March increase.

Meanwhile, July silver
SIN21,
+1.43%

added 30 cents, or 1.1%, to trade at around $27.36 an ounce, after falling 0.7% a day ago.

For the week, gold prices are looking at a weekly gain of 0.4%, while silver is on pace for a slide of 0.3%, based on the most-active contracts.

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