Gold flat as dollar strength counters weaker US bond yields
GOLD prices were flat on Thursday (May 19), as an elevated dollar weighed on greenback-priced bullion and countered support from lower Treasury yields, with the metal's outlook already dulled by an aggressive Federal Reserve stance on inflation.
Spot gold held its ground at US$1,816.63 per ounce at 12.47 am GMT. US gold futures edged 0.1 per cent lower to US$1,814.10.
The US dollar rose on Wednesday, snapping a 3-session losing streak, as concerns about the outlook for global economic growth and rapid inflation knocked sentiment a day after Fed Chair Jerome Powell struck a more hawkish tone.
A stronger dollar makes gold less attractive for buyers holding other currencies.
US Treasury yields fell on Wednesday, tracking losses on Wall Street, after poor US housing data added to growing slowdown concerns amid aggressive monetary tightening by the Fed, buoying demand for zero-yield gold.
Two US central bankers say they expect the Fed to downshift to a more measured pace of policy tightening after July as it seeks to quell inflation without lifting borrowing costs so high that they send the economy into recession.
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.
British inflation surged last month to its highest annual rate since 1982, pressuring finance minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession.
Spot silver fell 0.2 per cent to US$21.35 per ounce, platinum dropped 0.8 per cent to US$927.77, and palladium slipped 1 per cent to US$1,996.92. REUTERS
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