Gold slips from six-week high on stock strength
Jan 3 (Reuters) – Gold prices fell on Monday as rising bond yields and the rally in equities weighed on the metal’s appeal as a safe haven at the start of the new year, pushing it back compared to a six-week peak reached earlier in the session.
Spot gold fell 0.3% to $ 1,831.63 an ounce at 11:31 GMT, after hitting its highest level since November 22 at $ 1,831.62. US gold futures were down 0.1% to $ 1,826.40.
“The slight decline in gold prices is likely due to a positive risk sentiment, as measured by the rise in stock markets,” said UBS analyst Giovanni Staunovo.
Staunovo expects rising US interest rates and falling US inflation over 2022 to weigh on gold and forecast a price of $ 1,650 by the end of the year.
Gold prices ended 2021 down 3.6% for the biggest annual drop since 2015 as economies begin to recover from the coronavirus crisis.
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Quantitative Commodity Research analyst Peter Fertig said public holidays in parts of Europe resulted in low trading volumes, exaggerating gold price movements.
The dollar appreciated against its main rivals as the bullish market mood pushed up European equity and government bond yields.
“We saw the dollar start the year on a solid footing and exert slight downward pressure on an otherwise rising gold price,” independent analyst Ross Norman said.
What appears to be holding back the gold market continues to be the physical investor, Norman said, referring to the gold coin and bullion market. However, he added that this is not enough to propel institutions into exchange-traded funds or futures markets, where heavy liquidations and redemptions have taken place.
In other precious metals, silver was flat at $ 23.27 an ounce, platinum rose 1.8% to $ 979.44 and palladium rose 0.8% to 1,906.77 $.
Reporting by Seher Dareen in Bengaluru Additional reporting by Swati Verma Editing by David Goodman
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