Gold prices held near one-week lows on
Tuesday, as investors wagered that aggressive tightening plans
by major central banks are going to keep interest rates higher
for an extended time, boosting the U.S. Treasury yields and in
turn the dollar.
Spot gold was flat at $1,840.16 per ounce, as of 0232
GMT. Earlier in the session, bullion slipped to $1,836.10, its
lowest since June 1. U.S. gold futures also eased by 0.1%
“The move higher in U.S. yields ahead of this week’s U.S.
bond auction is spooking gold investors … The dollar is
surging on the back of those higher yields,” said Stephen Innes,
managing partner at SPI Asset Management.
The U.S. dollar was 0.2% higher as benchmark 10-year note
yields climbed to their highest in nearly a month.
Analysts at JP Morgan expect gold trading softer towards an
average of $1,800 an ounce in the third quarter amid an expected
rebound in investor risk sentiment and a continued push higher
in U.S. yields.
The U.S. Federal Reserve is on track for half-point interest
rate increases in June, July, and last week’s solid jobs report
boosted expectations of continued tightening by the U.S. central
CPI report due on Friday is being awaited for further clues
on the pace of U.S. rate hikes.
The European Central Bank also meets later this week as
investors ramp up their bets on interest rate hikes this year.
Higher rates dent gold’s appeal as they increase the
opportunity cost of holding non-yielding bullion.
“Finally we are in a global central bank rate-hike
environment, which is initially bad for gold, but of course rate
hikes come with economic growth consequence, hence, gold remains
gingerly,” Innes said.
Elsewhere, platinum fell 0.6% to $1,011.21 an ounce
and palladium was steady at $2,002.68. Silver
slipped 0.4% to $21.96.
(Reporting by Swati Verma in Bengaluru; Editing by Rashmi Aich
and Sherry Jacob-Phillips)
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