Gold prices hold near key level on support from weaker dollar

By Asha Sistla

(Reuters) - Gold steadied around the important $1,800 level on Wednesday as a pullback in the U.S. dollar and Treasury yields cushioned a jump in investor appetite for riskier assets.

 

Spot gold was last up 0.1% at $1,802.72 per ounce at 1037 GMT. U.S. gold futures GCv1 gained 0.1% to $1,802.90.

 

"Gold is very much a range-driven market at the moment," said Michael Hewson, chief market analyst at CMC Markets UK.

 

He added the metal was also unlikely to find direction in the near term as record high Euro zone inflation pressures the European Central Bank narrative that it would not raise interest rates this year. (Full Story)

 

Gold is considered a hedge against inflation, but tightening monetary policy would raise the opportunity cost of holding the non-yielding metal.

 

The expected interest rate hikes this year globally, starting with the Bank of England on Thursday, are also likely to the blunt the safe-haven boost from the Russia-Ukraine crisis, said Carlo Alberto De Casa, market analyst at Kinesis.

 

The metal was on Wednesday supported by remarks from U.S. Federal Reserve officials that pushed back against potentially aggressive rate increases this year. The comments weakened the dollar, making gold more attractive for other currency holders.

 

Benchmark U.S. 10-year Treasury yields also edged lower, providing further support to bullion. US/

 

Spot silver gained 0.7% to $22.79 an ounce, platinum XPT= rose 0.8% to $1,035.62, and palladium XPD= advanced 0.6% to $2,378.24.

 

Analysts have said that an escalation in tensions involving Ukraine could drive palladium prices higher due to fears of a disruption in supply from Russia, a major producer of the metal.

 

(Reporting by Asha Sistla in Bengaluru; Editing by Sherry Jacob-Phillips)