Gold subdued as lofty dollar, firmer U.S. bond yields dim appeal


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Gold prices edged lower on Thursday, as

an elevated U.S. dollar and rising Treasury yields weighed on

greenback-priced bullion, with the metal’s outlook already

dampened by an aggressive Federal Reserve stance on inflation.

Spot gold had eased 0.2% to $1,811.56 per ounce by

0754 GMT. U.S. gold futures fell 0.4% to $1,809.50.

Gold’s daily closing price is effectively hugging the

trendline projected from the March 2020 pandemic low, and

intraday volatile spikes either side of that key trendline have

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lacked conviction to prompt a sustainable move, City Index’s

senior market analyst Matt Simpson said.

Bullion has largely seemed to track daily moves in the

dollar and benchmark U.S. 10-year Treasury yields in recent

weeks, with 20-year highs in the greenback pushing gold prices

to their lowest in well over three months on Monday.

A stronger dollar makes gold less attractive for buyers

holding other currencies.

Gold’s performance and outlook have also been under the

cloud of an aggressive Fed monetary policy stance on rate hikes

as the bank pushes to rein in soaring inflation.

Higher U.S. short-term interest rates and bond yields raise

the opportunity cost of holding bullion, which yields nothing.

Fed Chair Jerome Powell on Tuesday pledged that the U.S.

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central bank would ratchet interest rates as high as needed to

kill a surge in inflation that he said threatened the foundation

of the economy.

“ETF (exchange traded fund) flows peaked on the 27th of

April and we’ve since seen a net outflow as investors have lost

confidence in the yellow metal … And the rout in stock markets

simply added another reason for some investors to convert their

gold to cash,” Simpson said.

Spot silver dipped 0.4% to $21.31 per ounce, and

platinum dropped 1.2% to $924.61, while palladium

slid about 2% to $1,976.02.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Sherry Jacob-Phillips and Bradley Perrett)



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