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
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
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