2021.07.2310:41:00UTC+00Gold Heads For First Weekly Dip On Dollar Strength

Gold prices eased on Friday and were on track for their first weekly decline in five as a stronger dollar made bullion more expensive for holders of other currencies.

Lower U.S. bond yields and COVID-related worries helped cap losses to some extent.

Spot gold dipped half a percent to $1,798.55 per ounce, while U.S. gold futures were down 0.4 percent at $1,797.90.

The dollar index hovered below a 3-1/2-month peak against its rivals and was heading for its second straight weekly rise, boosted by last month's hawkish shift from the Federal Reserve, burgeoning inflation and safe-haven demand driven by concerns over the Delta variant of COVID-19 which is now the dominant strain worldwide.

On Thursday, the European Central Bank kept its very accommodative monetary policy in place and revised its guidance on when interest rates might rise to convince investors it would keep interest rates at record lows for even longer.

The focus now shifts to the U.S. Federal Reserve meeting due next week, with Fed officials expected to accelerate deliberations over how to scale back their easy-money policies.