Monday, 6 December, 2021

Gold eases on firmer US dollar

Gold eases on firmer US dollar

BENGALURU: Gold prices eased on Wednesday, retreating from the key US$1,800 mark, as a stronger US dollar and elevated bond yields dented bullion’s safe-haven appeal ahead of key central bank meetings.

Spot gold was down 0.2 per cent at US$1,788.66 per ounce, as of 1.57 am GMT. US gold futures dropped 0.2 per cent to US$1,790.60, report agencies.

The precious metal rallied to an over 1-month peak late last week, but has retreated 1.2 per cent from those levels.

Benchmark 10-year US Treasury yields rose, increasing non-interest bearing gold’s opportunity cost.

The dollar also steadied close to a 1-week high hit in the previous session, making gold less appealing for buyers holding other currencies.

Market participants now await Thursday’s Bank of Japan (BOJ) and European Central Bank meetings.

The BOJ is set to maintain its massive stimulus programme on Thursday (Oct 28) and slash this year’s inflation forecast in a sign it has no intention to follow other central banks eyeing exits from crisis-mode policies.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion.