* Silver on track for best week in seven
* U.S. retail sales rose 0.7% in September
* Gold snaps three-session rally (Updates prices, add quote)
Oct 15 (Reuters) - Gold prices fell on Friday as a rebound in U.S. bond yields and a surprise increase in September retail sales dented bullion’s safe-haven status.
Spot gold fell 1.5% to $1,768.38 per ounce by 01:43 p.m. ET (1743 GMT). U.S. gold futures settled down 1.7% at $1,768.30.
“Gold has everything going against it. Real rates are rising, equities are higher, so is bitcoin,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
U.S. retail sales unexpectedly increased in September, boosting equities, and extending losses in risk-hedge gold.
Raising gold’s opportunity cost, U.S. benchmark 10-year Treasury yields recovered from a more than one-week low hit on Thursday.
While most Fed policymakers agree the central bank could start reducing its monthly bond purchases as soon as next month, they are sharply divided over inflation and what they should do about it.
Investors are likely expecting only a moderate tightening from major central banks and “that shouldn’t cause too much of a problem for gold as investors hedge against elevated price levels,” said Fawad Razaqzada, analyst with ThinkMarkets.
Reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.
In the physical markets, gold prices flipped to premiums in India, bolstered by festival demand.
Bullion remains on course for a small weekly gain as the dollar weakened.
Silver fell 0.9% to $23.32 an ounce, but was still headed for its biggest weekly gain in seven.
Platinum steadied at $1,055.24, while palladium fell 2.4% to $2,078.27. Both metals are used by automakers in catalytic converters to clean car exhaust fumes.
Platinum group metals’ prices could still have a way to go before they are back on an even keel, StoneX analyst Rhona O’Connell said in a note.
“As the semiconductor chip delivery dislocation is showing little signs of waning, vehicle producers are cutting output left right and centre.” (Reporting by Bharat Govind Gautam, Ashitha Shivaprasad and Nakul Iyer in Bengaluru; Editing by Uttaresh.V, Shailesh Kuber and Maju Samuel)
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