Gold gains as inflation worries outweigh higher yields

Article content

Gold prices rose on Monday, as growing

worries over broadening price pressures lifted the metal’s

appeal as an inflation hedge and helped cushion pressure from

higher US Treasury yields after a surprisingly upbeat jobs

report.

FUNDAMENTALS

* Spot gold rose 0.2% to $1,810.38 per ounce by 0129

GMT, hovering close to its highest nearly a week reached last

Friday, while US gold futures edged up 0.2% to

$1,812.10

* The dollar index was flat, while benchmark 10-year

US Treasuries hit their highest levels since December 2019 on

Article content

Friday.

* The Labor Department’s employment report showed nonfarm

payrolls jumped by 467,000 jobs last month, which could sustain

the Federal Reserve’s plan to raise interest rates.

* Wild swings in stocks and a sharp run-up in government

bond yields have put the spotlight on this week’s US inflation

data, as investors brace for more volatility across assets.

* Due out on Thursday, the US consumer price index for

January was expected to have risen 0.5%, culminating in an

annual rise of 7.3%, which would be the largest such increase

since 1982, according to a Reuters poll.

* Gold is considered a hedge against inflation and

geopolitical risks, yet rate hikes would raise the opportunity

cost of holding non-yielding bullion.

Article content

* Two US officials said on Saturday Russia had in place

about 70% of the combat power it could need to invade Ukraine,

while Russia said it was not planning an invasion but could take

unspecified military action if its security demands were not

met.

* Silver rose 0.9% to $22.67 per ounce, platinum

edged 0.1% up to $1,025.47 and palladium was up

0.7% to $2,299.68.

DATA/EVENTS (GMT)

0145 China Caixin Services PMI Jan

0700 UK Halifax House Prices MM Jan

0700 Germany Industrial Output MM Dec

0745 France Reserve Assets Total Jan

1545 – ECB President Lagarde speaks in a regular hearing to

the European Parliament’s Committee on Economic and Monetary

Affairs

(Reporting by Seher Dareen in Bengaluru; Editing by Subhranshu

Sahu)