Tuesday, July 5

Gold flat as lofty dollar, firmer US bond yields dim appeal


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Gold prices were flat on Thursday, as an

elevated US 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 held its ground at $1,813.96 per ounce, as

of 0512 GMT. US gold futures were flat at $1,813.40.

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 US 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 US 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 US

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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 was flat at $21.40 per ounce, and

platinum dropped 0.8% to $927.78, while palladium

rose 0.5% to $2,027.38.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Sherry Jacob-Phillips)

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