Gold scales one-week peak as dollar, US yields ease
Shafaq News/ old prices rose on Thursday to their highest level in more than a week, after softer U.S. inflation data halted an advance in Treasury yields and the dollar.
Spot gold gained 0.4% to $1,733.46 per ounce by 0546 GMT, after hitting its highest since March 3 at $1,734.55 earlier. U.S. gold futures climbed 0.6% to $1,732.20.
"We got a little bit of a shot in the arm for gold, when the CPI (consumer price index) number came in a little bit softer the dollar surge abated and yields stopped climbing, that's been a positive driver for gold," said IG Market analyst Kyle Rodda.
Benchmark U.S. yields remained subdued, while the dollar eased after the CPI data on Wednesday did not change expectations that inflation will exceed the Federal Reserve's 2% target.
Recent surge in yields has threatened gold's status as a hedge against inflation, since it translates into higher opportunity cost of holding bullion, which pays no return.
"Gold's trend is still to the downside. We continue to see real yields pushing higher, driven by the optimism around economic recovery, as well as expectations that at some point…central banks will have to unwind policy support," Rodda cautioned.
Investors are now awaiting a European Central Bank policy meeting later in the day to see if policymakers will take any action to reign in rising yields.
The $1.9 trillion U.S. COVID-19 relief bill was finally approved on Wednesday and is expected to supercharge the economic recovery.
"Sentiment for gold is still being driven by debt markets, in particular the 10-year U.S. yields," said Michael Langford, director at corporate advisory AirGuide, adding there was greater upside in other assets like copper and small-cap equities than in gold in the short term.
Silver rose 0.5% to $26.30 an ounce. Palladium eased 0.1% to $2,303.11, while platinum gained 1.1% to $1,216.32.