Saturday, March 2

Gold nudged off $1,800 level as improved risk appetite counters lower yields


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Gold prices edged lower on Wednesday,

moving away from the key psychological level of $1,800, as risk

appetite spurred by less hawkish comments from US Federal

Reserve officials outweighed support from lower Treasury yields.

Spot gold dipped 0.2% to $1,796.90 per ounce, as of

0844 GMT. US gold futures were down 0.1% to $1,799.60.

“The shift towards a more risk-on approach by investors is

probably gold-negative, however, the resultant weakness in the

dollar helps gold, and the decrease in US TIPS yields has

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provided support for gold,” said Nicholas Frappell, a global

general manager at ABC Bullion.

“(St. Louis Fed President James) Bullard’s comments on the

topic of a 50 bp rise is part of a tendency among Fed officials

to soften the markets’ take on the pace and extent of tightening

in 2022.”

A noted hawk, Bullard said on Tuesday he would argue for

interest rate rises in March, May and June, but did not favor a

half-point move.

Although gold is considered a hedge against inflation, rate

hikes would raise the opportunity cost of holding non-yielding

bullion.

When the Fed takes a solid decision about hiking rates next

month, investors will get a direction, said Hareesh V, head of

commodity research at Geojit Financial Services in India, adding

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that until then gold was likely to be lackluster.

Wall Street advanced on Tuesday and the energy index closed

at a multi-year high, although seesaw trading reflected investor

uncertainty about how to play the current market.

The dollar index eased to its lowest level in a week,

making gold attractive for other currency holders.

Benchmark US 10-year Treasury yields edged lower, limiting

losses in non-interest bearing bullion.

Spot silver gained 0.3% to $22.71 an ounce, platinum

rose 0.4% to $1,031.26, and palladium climbed 1.2%

to $2,391.99.

(Reporting by Asha Sistla in Bengaluru; Additional reporting by

Bharat Govind Gautam; Editing by Sherry Jacob-Phillips and

Subhranshu Sahu)

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