Gold and palladium shine as dollar flounders

Bengaluru — Gold prices rose to a two-month high on Thursday, approaching the key $1,800 threshold as the US dollar faltered with easing treasury yields, while supply concerns kept palladium anchored near last session’s record peak.

Spot gold was steady at $1,793.32/oz by 2.44am GMT, after hitting its highest since February 25 at $1,797.67. US gold futures were flat at $1,793.70/oz.

“What’s obviously underpinning the upswing [in gold] is that dynamic in US treasuries … which is sort of pushing lower in the very short term,” said IG Market analyst Kyle Rodda, adding that a drop below 1.5% in yields could help push gold above $1,800 levels. An improvement in market sentiment overnight and its knock-on effects on the dollar helped gold jump back again and test the top of its recent ranges, Rodda said.

The benchmark 10-year US treasury yield was pinned below 1.6%, reducing the opportunity cost of holding non-yielding bullion. The dollar index held near multi-week lows against most major currencies. Market participants now await a European Central Bank meeting due later in the day and a US Federal Reserve policy meeting next week.

Palladium gained 0.1% to $2,877.12/oz, having surged to an all-time high of $2,891.20/oz on Wednesday.

“Long-running tightness in the market is fuelling the metal’s rise as auto demand remains strong. Although Nornickel is bringing back to production two downed PGM [platinum group metals] mines, the market remains cautious of oversupply,” HSBC analysts wrote in a note.

The autocatalyst metal has surged nearly 25% since Russia’s Nornickel , the world’s largest producer of the metal, partly suspended operations at two of its mines in late February.

Among other precious metals, silver eased 0.5% to $26.45/oz and platinum slipped 0.2% to $1,211.32.