Gold eases as higher yields weigh before US inflation data

GOLD edged down on Friday (Jun 10) and headed for a weekly fall, as Treasury yields rose, with investors awaiting key monthly US inflation data that is due later in the day for cues on the future of monetary policy.

Spot gold was down 0.1 per cent at US$1,846.22 per ounce, as of 12.38 am GMT, while US gold futures eased 0.2 per cent to US$1,849.10.

Gold prices have fallen about 0.2 per cent so far this week.

Benchmark US 10-year Treasury yields edged up, hurting demand for zero-yield gold.

Economic data expected on Friday has market participants anxiously waiting for confirmation that decades-high inflation reached its summit in March and has commenced its long hike back down the mountain.

The US Federal Reserve will hike its key interest rate by 50 basis points in June and July, with rising chances of a similar move in September, according to a Reuters poll of economists who see no pause in rate rises until next year.

Bullion is often seen as an inflation hedge, but the opportunity cost of holding it is higher when the Fed raises short-term interest rates to combat inflation.

The number of Americans filing new claims for unemployment benefits increased to the highest level in nearly 5 months last week, but that likely does not mark a material shift in labour market conditions, which remain extremely tight.

The European Central Bank ended a long-running stimulus scheme on Thursday and said it would deliver next month its first interest rate hike since 2011, followed by a potentially larger move in September.

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Gold slips as rise in US bond yields dent demand

Spot silver dipped 0.1 per cent to US$21.65 per ounce, and platinum fell 0.5 per cent to US$966.13, while palladium rose 0.2 per cent to US$1,928.17. All are on course for weekly declines. REUTERS