Wednesday, May 18

Gold subdued as stronger dollar counters Ukraine risks


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Gold traded in a tight range on Friday

as the dollar climbed higher on prospects of aggressive interest

rate hikes by the US Federal Reserve, partially offsetting

safe-haven demand fueled by the heightened Russia-Ukraine

conflict.

Spot gold was flat at $1,929.52 per ounce by 0520

GMT. US gold futures were down 0.3% at $1,931.90.

“Gold has held up relatively well this week given the move

higher by both US yields and the US dollar, we may be seeing

some underlying haven and inflation hedging buying supporting

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the downside,” said OANDA senior analyst Jeffrey Halley.

The US dollar climbed to a near two-year high against a

basket of currencies and set for its best week in a month,

backed by hawkish remarks from several Federal Reserve policy

makers who are calling for a faster pace of interest rate

increases to curb rapid inflation.

A stronger US dollar makes gold less attractive for other

currency holders.

The benchmark US 10-year Treasury yield touched a

three-year high in the previous session, increasing the

opportunity cost of holding non-yielding bullion.

Gold, however, is being supported by the Ukraine

uncertainty, rapid inflation, and the still persistent COVID-19

pandemic but the Fed’s aggressive stance to combat inflation,

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recovering bond yields, stronger dollar and easing of pandemic

restrictions on higher vaccination rates will put a lid on gold

prices, Fitch Solutions said in a note dated April 7.

Russia gave the most somber assessment so far of its

invasion of Ukraine, describing the “tragedy” of mounting troop

losses and the economic hit from sanctions, as Ukrainians were

evacuated from eastern cities before an anticipated major

offensive.

Spot silver was flat at $24.57 per ounce.

Platinum was down 0.2% at $961.05 and palladium

rose 1.5% to $2,267.55. Both metals were set for a

fifth-consecutive weekly loss.

(Reporting by Asha Sistla in Bengaluru; Editing by Sherry

Jacob-Phillips)

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