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Gold firms as dollar rally pauses; focus on US inflation reading

The dollar was steady after touching a 20-year high on Monday, while benchmark 10-year U.S. Treasury yields were off 3-1/2-year peaks. [USD/] [US/]

Gold  | Dollar | Inflation data


Photo: Bloomberg

By Eileen Soreng

(Reuters) - rose on Tuesday as the in which it is priced steadied, prompting some investors to buy the metal ahead of U.S. that could impact the Federal Reserve's monetary policy.

Spot was up 0.5% at $1,862.48 per ounce by 1133 GMT, recovering slightly after falling as much as 1.7% on Monday on the dollar's rally. U.S. futures rose 0.1% to $1,859.40 per ounce.

The was steady after touching a 20-year high on Monday, while benchmark 10-year U.S. Treasury yields were off 3-1/2-year peaks. [USD/] [US/]

"Gold remains a hedge against a (potential) policy mistake and that still continues to attract some buyers at these lower levels," Saxo Bank analyst Ole Hansen said.

"From a technical perspective the key $1,850 level has now held on several occasions, so that's just attracting some short-covering," Hansen added.

Fears of a possible global economic slowdown amid aggressive policy tightening by major central banks and soaring inflation have soured sentiment in global share . [MKTS/GLOB]

Although gold is considered a hedge against inflation and a safe haven during global political and economic uncertainties, it's highly sensitive to rising U.S. interest rates, which raise the opportunity cost of holding non-yielding bullion.

Higher yields also tend to boost the dollar, dimming appetite for gold among overseas investors.

Wednesday's key U.S. consumer price index (CPI) data will be closely watched for any impact it could have on the Fed's rate-hike plans.

Further downside risks for gold may lie ahead, as a higher inflation number could strengthen the case for an increase in the pace of tightening by the Fed and fuel further gains, Ricardo Evangelista, senior analyst at ActivTrades said in a note.

Spot silver rose 0.5% to $21.90 per ounce, platinum gained 2.4% to $977.88 and palladium fell 0.3% to $2,090.16.


(Reporting by Eileen Soreng in Bengaluru; Editing by Vinay Dwivedi and Louise Heavens)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Tue, May 10 2022. 18:04 IST