Gold gains as subdued US dollar, bond yields lift appeal

[BENGALURU] Gold prices rose on Thursday as a pullback in the US dollar and Treasury yields lifted demand for the safe-haven metal, while investors awaited US non-farm payrolls data for April due later this week.

Spot gold was up 0.4 per cent at US$1,794.30 per ounce by 6.50am GMT. US gold futures rose 0.6 per cent to US$1,794.20 per ounce.

"The US Federal Reserve is continuing to push back here, it is good for gold because it's keeping yields lower. I think this will eventually lead to a weaker US dollar," said Stephen Innes, managing partner at SPI Asset Management.

"A test of US$1,800 is expected sooner rather than later the way this market is marching on to the beat of a very dovish Fed."

Benchmark US 10-year Treasury yields slipped below 1.6 per cent and hovered close to a one-week low hit on Tuesday, reducing the opportunity cost of holding non-interest bearing gold.

The dollar index dipped 0.1 per cent, moving further away from a near two-week high hit on Wednesday.

Focus now shifts to Friday's US monthly jobs report, which is expected to show non-farm-payrolls increased by 978,000 last month.

The US economy may be growing more quickly and unemployment falling faster than the core of Fed policymakers projected in March, Fed Governor Michelle Bowman said on Wednesday.

However, Chicago Fed President Charles Evans reiterated his worries about reaching the 2 per cent inflation goal and said he expected monetary policy to stay accommodative for some time.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

Spot gold is expected to retest resistance at US$1,802 per ounce, with a good chance of breaking above this level and rising to US$1,816, according to Reuters technical analyst Wang Tao.

Palladium rose 0.4 per cent to US$2,984.97 per ounce, after scaling an all-time high of US$3,017.18 on Tuesday on supply shortfalls.

Silver was up 1 per cent at US$26.77 per ounce, while platinum dipped 0.5 per cent to US$1,230.66.

REUTERS