Gold prices firm, helped by lower US bond yields

Bengaluru — Gold prices trod water on Wednesday, with lower US treasury yields lending support, as bullion’s struggle to break out of its rangebound trade continued.

Spot gold was up 0.1% at $1,821.57 per ounce by 2.54am GMT. US gold futures firmed 0.1% at $1,823.10. Helping the appeal of non-yielding bullion, benchmark US 10-year treasury yields eased on Wednesday after three straight sessions of gains.

US Federal Reserve policymakers promised further rapid interest-rate hikes to bring down high inflation on Tuesday, but pushed back against growing fears among investors and economists that sharply higher borrowing costs will trigger a steep downturn.

“Overall, the outlook for interest rates means that when we do get a break out of this trading zone we’ve been stuck in now for a couple of months, it’s more likely to be to the downside,” said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

Though gold is seen as an inflation hedge, higher short-term US interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest.

“Rising interest rates and a stronger US dollar are acting against inflation-hedging forces. So we’ve got balance in the gold market at the moment,” McCarthy said, adding that it is very hard to get excited about the prospects for gold with so many other markets showing higher volatility.

A stronger US dollar makes gold less attractive for buyers holding other currencies.

The US banned new imports of Russian gold, acting on commitments made by the Group of Seven (G7) leaders this week to further punish Russia over its invasion of Ukraine. The move, however, is being seen as symbolic, as gold exports from Russia to the West have already dried up.

Spot silver was flat at $20.84 per ounce, while platinum rose 0.5% to $914.64 and palladium gained 2% to $1,910.43. 

Reuters