Gold Stalls on Firmer Dollar, US Bond Yields

One kilogram Argor Heraeus SA branded gold bars are on display for photograph at the Chinese Gold and Silver Exchange Society in Hong Kong, China.

Brent Lewin | Bloomberg | Getty Images

Gold prices were flat on Tuesday as a firmer dollar and US Treasury yields weighed on its appeal and limited the metal to a tight $ 4 range.

Spot gold was little changed at $ 1,778.79 an ounce at 01:30 GMT. US gold futures were flat at $ 1,780.00.

The dollar index stabilized, hanging on to an overnight surge achieved with US yields, with investors hoping the first signs that the omicron variant may be subdued will prove to be correct.

A stronger dollar increases the costs of gold for buyers holding other currencies, while higher yields increase the opportunity cost of bullion.

Bank of England Deputy Governor Ben Broadbent said on Monday that inflation in Britain could “comfortably exceed” 5% in April and that the country’s tight labor market risked becoming a source of more persistent inflation.

Reducing stimulus and rising interest rates tend to drive up government bond yields, raising the opportunity cost of non-interest bearing gold.

Financial markets, which have struggled this year to decipher central bankers’ political signals, face their biggest challenge yet in December when within 24 hours the Federal Reserve, the ECB and the Bank from England hold crucial meetings.

Eurozone finance ministers remained optimistic on Monday about the prospects for economic growth despite the omicron variant of the coronavirus, and they agreed to continue moderately favorable fiscal policy next year.

The Perth Mint’s sales of gold products in November jumped about 94% from the previous month to an eight-month high, the refiner said on Monday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell about 0.2% to 982.64 tonnes on Monday from 984.38 tonnes on Friday.

Spot silver fell 0.2% to $ 22.31 an ounce. Platinum was flat at $ 938.00 and palladium fell 0.3% to $ 1,849.19.

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