Gold firms as softer dollar negates pressure from higher yields
GOLD prices edged higher on Wednesday (May 18), as a weakening dollar countered pressure from stronger Treasury yields and an aggressive stance on inflation by the US Federal Reserve chief.
A weaker dollar makes gold more attractive for buyers holding other currencies.
Spot gold was up 0.1 per cent at US$1,816.56 per ounce, by 1.06 am GMT. US gold futures dipped 0.2 per cent to US$1,814.50.
The dollar extended its decline to a fourth day, pulling back from a recent 2-decade high against a basket of major peers, as an uptick in investors' appetite for riskier bets diminished the US currency's appeal.
However, yields on the benchmark US 10-year Treasury note steadied after a sharp rise in the previous session, capping demand for zero-yield gold.
Fed Chair Jerome Powell on Tuesday pledged that the US central bank would ratchet interest rates as high as needed to kill a surge in inflation that he said threatened the foundation of the economy.
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The Fed has raised its benchmark policy rate by 3-quarters of a percentage point this year and is on track to increase it again in half-percentage-point increments at its next 2 meetings in June and July.
Although seen as an inflation hedge, bullion is sensitive to rising US short-term interest rates and bond yields, which raise the opportunity cost of holding it.
US retail sales increased solidly in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants, showing no signs of demand letting up despite high inflation.
Spot silver rose 0.2 per cent to US$21.66 per ounce, platinum gained 0.1 per cent to US$952.31, and palladium advanced 0.2 per cent to US$2,057.35. REUTERS
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