Gold prices ease amid dollar gains and treasury yield rebound

SINGAPORE: Gold inched lower on Thursday, pressured by a stronger US dollar and rising Treasury yields, while investors awaited a key inflation report to assess the Federal Reserve’s policy path.

Spot gold was down 0.1 per cent at $2,912.94 an ounce as of 0232 GMT. US gold futures fell 0.1 per cent to $2,927.20.

The dollar index (.DXY) rose 0.2 per cent against its rivals to move further from recent 11-week lows as vague pledges from President Donald Trump to impose tariffs on Europe and further delays to levies planned for Canada and Mexico stoked uncertainty.

Benchmark 10-year US Treasury yields also rebounded from an earlier drop, making non-yielding gold less appealing.

“A light pickup in the dollar and US Treasury yields is seen to be pressuring gold a bit in this session,” said Ilya Spivak, an investment analysis streaming site Tastylive, adding that the overall uptrend for gold is broadly intact.

Several Fed officials are due to speak later in the day for more insights on monetary policy easing this year.

Markets will next look to the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure, due on Friday, for further confirmation of the central bank’s interest rate path.

The consensus forecast was for a PCE monthly index of 0.3 per cent, unchanged from December, according to a Reuters poll, while the core number is seen rising 0.3 per cent, up from 0.2 per cent in December.

“The markets are sensitive to growth concerns at the moment after dismal US PMI data last week, and any stronger-than-expected PCE outcomes that point away from Fed rate cuts in the near term might hurt gold,” Spivak added.

Bullion is seen as a safeguard against political risks and inflation, but higher interest rates dampen the non-yielding asset’s appeal.

Spot silver was steady at $31.84 an ounce, platinum fell 0.1 per cent to $964.95, and palladium eased 0.1 per cent to $926.03.

Read next: Oil prices rise after US blocks Chevron’s Venezuela exports