Gold price lifts slightly but is probably just a ‘technical bounce’
We see gold at about $1,500 by the end of 2022, especially with tapering having completed its course by then, one analyst expects
Bengaluru — Gold prices crawled up on Wednesday as US treasury yields slightly eased, but held close to a seven-week trough on growing expectations of a quicker-than-expected US rate hike that pushed the dollar to a multi-month high.
Spot gold rose 0.4% to $1,740.19/oz by 3.30am GMT. On Tuesday prices fell to their lowest level since August 11 to $1,726.19.
US gold futures edged 0.2% higher to $1,740.50/oz.
“What you're seeing this morning is just a technical bounce ... There is a very little bullish case for gold right now,” said OCBC Bank economist Howie Lee.
“We see gold at around $1,500 by the end of 2022, especially with tapering having completed its course by then and the Fed looking to start raising its interest rates.”
The dollar index hovered near a more than 10-month high, touched on Tuesday.
Though the benchmark US 10-year treasury yields eased off a bit, they held above 1.5%, a level last seen in June.
Higher yields translate into higher opportunity costs for holding noninterest-bearing bullion.
On Tuesday, St Louis Federal Reserve president James Bullard cautioned that high inflation may require more aggressive steps by the central bank, including two interest-rate hikes in 2022.
In his testimony before the US Senate banking committee, Fed chair Jerome Powell said the US economy was still far from achieving maximum employment, a key component of the central bank’s requirements for raising interest rates.
Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, slipped to 990.03 tonnes on Tuesday from 990.32 tonnes the day before.
Silver rose 0.4% to $22.52/oz.
Platinum edged up 0.3% to $969.75, while palladium gained 1.1% to $1,896.23.
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