Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold grain at a refinery in Russia. Picture: BLOOMBERG/ANDREY RUDAKOV
Bengaluru — Gold prices edged lower on Tuesday, but hovered near a two-month peak on a softer dollar and US bond yields, as investors awaited US inflation data to gauge the Federal Reserve’s next move on rate hikes.
Spot gold fell 0.1% to $1,822.86 an ounce by 4.26am GMT, about $4 shy off a two-month peak scaled earlier in the session. US gold futures dropped 0.2% to $1,824.80.
A subdued dollar and lower benchmark 10-year Treasury yields kept bullion’s appeal intact.
A weaker dollar reduces bullion’s cost for buyers holding other currencies, while lower yields decrease non-interest bearing bullion’s opportunity cost.
Nicholas Frappell, a global general manager at ABC Bullion said gold faced stiff resistance at about $1,835 and the metal’s trajectory over the coming sessions hinged mainly on Wednesday’s US consumer price index (CPI) report.
That, along with the producer price index due later on Tuesday, could test the Fed’s stance on rate hikes as tightness in the labour market combined with global supply chain issues could result in another high reading.
The data also comes on the heels of remarks from several Fed officials expressing growing concerns over more persistent price increases. But Fed vice-chair Richard Clarida and Chicago Fed president Charles Evans suggested a rate hike was not yet on the cards.
Gold has benefited from near-zero interest rates introduced during the pandemic as they reduce bullion’s opportunity cost.
“I wouldn’t expect anything imminent from the Fed, but an above-consensus CPI could make the market’s anticipation of a 2022 rate hike more likely”, Frappell said, adding that such a scenario would be potentially negative for gold.
Spot silver fell 0.3% to $24.37 an ounce. Platinum eased 0.8% to $1,047.11 and palladium dropped 1% to $2,049.17.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold close to two-month high
Bengaluru — Gold prices edged lower on Tuesday, but hovered near a two-month peak on a softer dollar and US bond yields, as investors awaited US inflation data to gauge the Federal Reserve’s next move on rate hikes.
Spot gold fell 0.1% to $1,822.86 an ounce by 4.26am GMT, about $4 shy off a two-month peak scaled earlier in the session. US gold futures dropped 0.2% to $1,824.80.
A subdued dollar and lower benchmark 10-year Treasury yields kept bullion’s appeal intact.
A weaker dollar reduces bullion’s cost for buyers holding other currencies, while lower yields decrease non-interest bearing bullion’s opportunity cost.
Nicholas Frappell, a global general manager at ABC Bullion said gold faced stiff resistance at about $1,835 and the metal’s trajectory over the coming sessions hinged mainly on Wednesday’s US consumer price index (CPI) report.
That, along with the producer price index due later on Tuesday, could test the Fed’s stance on rate hikes as tightness in the labour market combined with global supply chain issues could result in another high reading.
The data also comes on the heels of remarks from several Fed officials expressing growing concerns over more persistent price increases. But Fed vice-chair Richard Clarida and Chicago Fed president Charles Evans suggested a rate hike was not yet on the cards.
Gold has benefited from near-zero interest rates introduced during the pandemic as they reduce bullion’s opportunity cost.
“I wouldn’t expect anything imminent from the Fed, but an above-consensus CPI could make the market’s anticipation of a 2022 rate hike more likely”, Frappell said, adding that such a scenario would be potentially negative for gold.
Spot silver fell 0.3% to $24.37 an ounce. Platinum eased 0.8% to $1,047.11 and palladium dropped 1% to $2,049.17.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.