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Gold falls as yields, dollar firm ahead of U.S. inflation data

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Gold fell on Thursday as elevated U.S.

Treasury yields and a firm dollar dimmed its appeal in the

run-up to U.S. inflation data that could strengthen the case for

aggressive policy tightening by the Federal Reserve.

Spot gold was down 0.5% at $1,844.67 per ounce by

11:58 a.m. EDT (1558 GMT), while U.S. gold futures fell

0.5% to $1,847.20.

“The ECB signaled they’re going to start raising rates in

July and continue to raise rates. It has gold trading a little

lower … Feels like there’s some risk off in the markets that’s

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spilling over into gold too, plus the bond yields are up a

little bit,” said Bob Haberkorn, senior market strategist at RJO

Futures.

The ECB said it will end bond buys on July 1 and raise rates

by 25 basis points later in the month. It will hike again in

September and may opt for a bigger move then, if the inflation

outlook fails to improve.

U.S. yields rose, increasing the opportunity cost of holding

non-yielding gold, while the dollar firmed , making gold

less appealing for overseas buyers.

“Tomorrow’s inflation print has gathered substantial

attention, but with the next few Fed hikes set in stone, the

immediate relevance of data releases is limited,” TD Securities

wrote in a note.

“Instead, market participants will be honed-in on any

information that could inform the Fed’s decision-making process

post-September.”

The core consumer price index (CPI) is expected to have

risen 5.9% on the year, after an annual rise of 6.2% in April,

according to a Reuters poll.

The CPI data due Friday could offer clues on whether the Fed

will continue its aggressive tightening in the second half of

the year.

Spot silver slipped 1.7% to $21.66 per ounce,

platinum dropped 3.4% to $971.72, while palladium

fell 0.6% to $1,930.52.

(Reporting by Kavya Guduru in Bengaluru;

Editing by Vinay Dwivedi)

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