Gold holds around 2-month peak as firmer US yields weigh

[BENGALURU] Gold prices on Thursday (Jan 20) steadied near a 2-month high hit in the previous session, with higher US Treasury yields preventing any gains amid caution building around developments at the US Federal Reserve's meeting due next week.

Spot gold was flat at US$1,839.36 per ounce as of 12.31 am GMT, steadying near its highest since Nov 22. US gold futures were down 0.1 per cent at US$1,840.60.

Gold saw its best session in 3 months on Wednesday as a retreat in the dollar and geopolitical tensions surrounding Ukraine lifted safe-haven appeal, sparking a rally in precious metals.

Benchmark US 10-year Treasury yields were higher on Thursday, lightly pressuring gold.

The US Federal Reserve will tighten monetary policy at a much faster pace than thought a month ago to tame persistently high inflation, now viewed by economists polled by Reuters as the biggest threat to the US economy over the coming year.

The US central bank's Federal Open Market Committee is scheduled to meet on Jan 25-26.

Although gold is considered an inflationary hedge, the metal is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-interest bearing bullion.

Strong US and European corporate results could not stop a slide on Wall Street, as rising crude prices kept inflation concerns alive.

Inflation in Britain rose faster than expected to its highest in nearly 30 years in December, intensifying a squeeze on living standards and putting pressure on the Bank of England to raise interest rates again.

Spot silver was down 0.1 per cent at US$24.09 an ounce, platinum edged 0.1 per cent higher to US$1,022.60, and palladium fell 0.4 per cent to US$1,992.71.

REUTERS