Gold gains for 5th straight session as dollar, treasury yields retreat

By Seher Dareen

(Reuters) - Gold prices rose to their highest in two weeks on Tuesday, with the safe-have metal benefiting from a wilting U.S. dollar and as Treasury yields declined on subdued risk appetite.

Spot gold rose 0.8% to $1,867.41 per ounce by 1620 GMT, after hitting its highest since May 9 at $1,868.69 earlier in the session. U.S. gold futures rose 1% to $1,867.00

Weakness in the dollar index along with a fall in U.S. Treasury yields from their recent highs has provided a supportive environment for gold, said David Meger, director of metals trading at High Ridge Futures. [.N]

The greenback hit a one-month low, while U.S. 10-year Treasury yields also edged lower as weakness in equities revived safe-haven demand for the debt. [USD/] [US/] [MKTS/GLOB]

"Gold traders are increasingly questioning the Fed's willingness to hike into a recession, as growing economic concern is breathing life into the gold market. Upside flow from CTAs along with renewed growth in ETFs have supported the recovery," analysts at TD Securities wrote in a note. [GOL/ETF]

The yellow metal is seen as a safe store of value during times of economic crisis and a hedge against inflation, but rising interest rates tend to weigh on non-yielding bullion.

Once the Federal Reserve has delivered half-of-a-percentage point rate hikes [in June and July] as Chair Jerome Powell has signaled, "a pause in September might make sense," according to Atlanta Fed President Raphael Bostic.

"Now that we know what we're getting out of the Fed, you could argue that gold once again has a fairly clear path moving forward," Meger added, highlighting the market still questions whether the rate hikes would be enough to stave off inflationary pressures in the short term.

Spot silver rose 1.5% to $22.09 per ounce, platinum fell 0.2% to $956.55 and palladium rose 0.4% to $2,001.71.

 

(Reporting by Seher Dareen in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)