Gold gains as inflation worries outweigh higher yields

[BENGALURU] Gold prices rose on Monday (Feb 7), as growing worries over broadening price pressures lifted the metal's appeal as an inflation hedge and helped cushion pressure from higher US Treasury yields after a surprisingly upbeat jobs report.

Spot gold rose 0.2 per cent to US$1,810.38 per ounce by 1.29 am GMT, hovering close to its highest nearly a week reached last Friday, while US gold futures edged up 0.2 per cent to US$1,812.10.

The dollar index was flat, while benchmark 10-year US Treasuries hit their highest levels since December 2019 on Friday.

The Labor Department's employment report showed nonfarm payrolls jumped by 467,000 jobs last month, which could sustain the Federal Reserve's plan to raise interest rates.

Wild swings in stocks and a sharp run-up in government bond yields have put the spotlight on this week's US inflation data, as investors brace for more volatility across assets.

Due out on Thursday, the US consumer price index for January was expected to have risen 0.5 per cent, culminating in an annual rise of 7.3 per cent, which would be the largest such increase since 1982, according to a Reuters poll.

Gold is considered a hedge against inflation and geopolitical risks, yet rate hikes would raise the opportunity cost of holding non-yielding bullion.

Two US officials said on Saturday Russia had in place about 70 per cent of the combat power it could need to invade Ukraine, while Russia said it was not planning an invasion but could take unspecified military action if its security demands were not met.

Silver rose 0.9 per cent to US$22.67 per ounce, platinum edged 0.1 per cent up to US$1,025.47 and palladium was up 0.7 per cent to US$2,299.68. REUTERS