Gold firms near 4-1/2-month peak on weaker US dollar, yields

[BENGALURU] Gold prices held firm near a 4-1/2-month high on Wednesday as a drop in US Treasury yields and a weaker dollar supported the safe-haven metal.

Spot gold was steady at US$1,899.11 per ounce by 12.41am GMT, after hitting its highest since Jan 8 at US$1,899.11 on Tuesday.

US gold futures edged 0.1 per cent higher to US$1,899.60 per ounce.

The dollar index was pinned near a 4-1/2-month low against its rivals, making gold cheaper for other currency holders.

Benchmark US Treasury yields fell to a two-week low of 1.56 per cent overnight, reducing the opportunity cost of holding non-interest bearing gold.

US consumer confidence hovered at a 14-month high in May as optimism over jobs tempered concerns about rising inflation and diminishing government financial support.

The US Federal Reserve can curb an outbreak of inflation should it occur without throwing the recovery off track, Fed vice-chair Richard Clarida said on Tuesday.

Fed policymakers have begun to acknowledge they are closer to debating when to pull back some of their crisis support for the US economy, even as they say it is still needed to bolster the recovery and employment.

US Senate Republicans plan to unveil a counteroffer to President Joe Biden's US$1.7 trillion infrastructure proposal on Thursday, though one of their leaders said on Tuesday the two sides remain far apart.

The European Central Bank (ECB) must keep its money taps fully open, as the euro zone economy is still in the throes of the Covid-19 pandemic despite progress in vaccination campaigns, ECB policymaker Yannis Stournaras said.

Some investors view gold as a hedge against higher inflation that could follow stimulus measures.

Palladium rose 0.3 per cent to US$2,778.97 per ounce, silver was steady at US$27.99 and platinum gained 0.8 per cent to US$1,200.69.

REUTERS