Gold rises as dollar and treasury yields ease

Bengaluru — Gold prices ticked up on Thursday as the US dollar and treasury yields eased, with market participants awaiting new indications on the Federal Reserve’s rate hike plans.

Spot gold was up 0.2% to $1,807.57 per ounce as of 3.03am GMT, after dropping 1% in the last session. US gold futures fell 0.1% to $1,814.30.

The dollar index slipped 0.2%. A weaker greenback makes bullion more appealing to buyers holding other currencies. Benchmark US 10-year treasury yields eased after hitting a six-week high in the previous session.

Traders will scan the weekly US jobless claim numbers due at 1.30pm GMT for their likely influence on the Fed’s rate-hike strategy.

“Jobless data will be important. If it shows an increases in claims, then it should weaken dollar and support gold,” said Ajay Kedia, director at Kedia Commodities, Mumbai.

Bullion is on track for a yearly decline of about 1% pressured by aggressive US rate hikes. However, prices have risen nearly $200 from a more than two-year low hit in September on hopes that the US central bank might slow its pace of interest rate hikes.

The Fed slowed its pace of rate hikes to 50 basis points (bps) in December after four consecutive increases of 75 bps each, while Fed chair Jerome Powell has emphasised the need to keep rates elevated for a time to fight inflation.

Higher rates dim gold’s anti-inflationary appeal and increase the opportunity cost of holding the asset since it pays no interest.

“In 2022, gold has already priced in the rate hikes. In 2023, gold will be well supported by geopolitical tensions, recession woes and central bank buying,” added Kedia.

“Gold ETFs are also starting to rise.”

Spot silver gained 0.2% to $23.57, platinum rose 0.3% to $1,010.67 and palladium was up 0.2% to $1,786.97.

Reuters