Friday, July 1

Gold dips on firm dollar, yields as inflation test looms


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Gold prices fell on Monday, pressured by

an uptick in the US dollar and Treasury yields, as attention

turned to US inflation data this week that could strengthen

the case for aggressive interest rate hikes by the Federal

Reserve.

Spot gold was down 0.5% at $1,841.29 per ounce by

2:03 pm EDT (1803 GMT), while US gold futures settled

down 0.4% at $1,843.70.

US bond yields were higher in the run-up to data on Friday

which is expected to show still high inflation. The dollar also

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firmed , making gold less appealing for overseas buyers.

Although gold is considered a hedge against inflation,

higher interest rates to tame the rising price pressures dim the

appetite for non-yielding bullion.

“If we do get a little bit of a hotter inflation report,

gold will weaken … It is a kind of a wait-and-see approach as

far as when will we find out how far the Fed will raise rates to

control this inflation,” said Edward Moya, senior analyst with

OANDA.

But the overall belief that inflation is decelerating and

will continue to decelerate, along with the Fed policy being

priced in, should provide some stability for gold prices, Moya

added.

While the Fed is on track to deliver half-a-point interest

rate hikes at its June and July policy meetings, a high

inflation reading would add to expectations of aggressive

tightening even in the second half of the year.

“Summer trading has officially begun, which suggest prices

could remain range-bound near $1850/oz, but the set-up remains

for additional liquidations on the horizon,” TD Securities said

in a note.

Investors also await the European Central Bank meeting on

Thursday.

Silver rose 0.9% to $22.11 per ounce, palladium

gained 1.4% to $2,003.42 and platinum rose 1.5% to

$1,029.00.

(Reporting by Kavya Guduru in Bengaluru; Editing by Aditya Soni

and Krishna Chandra Eluri)



financialpost.com

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