Gold prices stagnate as firmer US yields hurt appeal
Jan 18 (Reuters) – Gold prices were flat on Tuesday as a weaker dollar partially offset pressure from high U.S. Treasury yields, which are dampening the appeal of non-yielding bullion.
Spot gold held ground at $1,818.87 an ounce, at 0022 GMT. US gold futures edged up 0.1% to $1,818.50.
Treasury yields rose along the curve on Tuesday, taking the short end to new pandemic highs on rate hike expectations.
The focus is now on the US Federal Reserve meeting on January 25-26 after policymakers announced they would start raising interest rates in March to keep inflation under control.
Gold is considered a hedge against inflation, but the metal is very sensitive to rising US interest rates, which increases the opportunity cost of holding non-interest bearing bullion.
The US dollar weakened slightly and hovered near its lowest level in two months, making greenback-priced gold more attractive to overseas buyers.
The Bank of Japan is expected to revise its inflation forecast upwards on Tuesday and acknowledge emerging signs of a shift in the country’s deflationary mindset, as stubbornly high global commodity costs spur more businesses to raise prices.
Australian consumer confidence took a hit last week as an explosion of coronavirus cases triggered self-imposed lockdowns, crushing spending and tearing holes in supply chains.
The global labor market will take longer to recover than previously thought, with unemployment expected to remain above pre-COVID-19 levels until at least 2023 due to uncertainty over the evolution and duration of the pandemic, the International Labor Organization said in a report on Monday.
Spot silver rose 0.1% to $23.02 an ounce, platinum rose 0.3% to $974.43 and palladium was flat at $1,874.66.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips) 3590 (If you are in the US, call 651-848-5832 ;))
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