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Gold flat as dollar strength counters weaker U.S. bond yields

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Gold flat as dollar strength counters weaker U.S. bond yields

Gold prices were flat on Thursday as a higher U.S. dollar weighed on dollar-denominated gold and offset support from falling U.S. Treasury yields, while the Federal Reserve’s aggressive stance on inflation has dimmed the outlook for gold.

Fundamentals Spot gold was steady at $1,816.63 an ounce at 0047 GMT. U.S. gold futures edged down 0.1 percent to $1,814.10.

The dollar rose on Wednesday, snapping a three-session losing streak, as concerns over the outlook for global growth and rapid inflation hit markets a day after Federal Reserve Chairman Jerome Powell delivered a more hawkish tone mood.

A stronger dollar makes gold less attractive to buyers holding other currencies.

U.S. Treasury yields fell on Wednesday, tracking losses on Wall Street after poor U.S. housing data added to concerns about a slowdown in aggressive monetary tightening by the Federal Reserve, boosting demand for zero-yielding gold.

Two U.S. central bankers said they expected the Fed to turn to a more cautious pace of policy tightening after July as it tries to tame inflation without raising borrowing costs so high that the economy slips into recession.

Although seen as an inflation hedge, gold is sensitive to rising U.S. short-term interest rates and bond yields, which raises the opportunity cost of holding gold.

UK inflation surged last month to its highest annual rate since 1982, weighing on finance ministers

Sunak will provide more help for households and the Bank of England to continue raising interest rates amid the risk of a recession.

Spot silver was down 0.2% at $21.35 an ounce, platinum was down 0.8% at $927.77 and palladium was down 1% at $1,996.92.

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