Gold nears US$1,800 level as US dollar, yields retreat

[BENGALURU] Gold prices rose to a two-month high on Thursday, approaching the key US$1,800 threshold as the US dollar faltered with easing Treasury yields, while supply concerns kept palladium anchored near last session's record peak.

Spot gold was steady at US$1,793.32 per ounce by 2.44am GMT, after hitting its highest since Feb 25 at US$1,797.67. US gold futures were flat at US$1,793.70 per ounce.

"What's obviously underpinning the upswing (in gold) is that dynamic in US Treasuries... which is sort of pushing lower in the very short term," said IG Market analyst Kyle Rodda, adding that a drop below 1.5 per cent in yields could help push gold above US$1,800 levels.

An improvement in market sentiment overnight and its knock-on effects on the dollar helped gold jump back again and test the top of its recent ranges, Mr Rodda said.

Benchmark 10-year US Treasury yield was pinned below 1.6 per cent, reducing the opportunity cost of holding non-yielding bullion. The dollar index held near multi-week lows against most major currencies.

Market participants now await a European Central Bank meeting due later in the day and a US Federal Reserve policy meeting next week.

Palladium gained 0.1 per cent to US$2,877.12 an ounce, having surged to an all-time high of US$2,891.20 per ounce on Wednesday.

"Long running tightness in the market is fuelling the metal's rise as auto demand remains strong. Although Nornickel is bringing back to production two downed PGM (Platinum Group Metals) mines, the market remains cautious of oversupply," HSBC analysts wrote in a note.

The auto-catalyst metal has surged nearly 25 per cent since Russia's Nornickel, the world's largest producer of the metal, partly suspended operations at two of its mines in late February.

Among other precious metals, silver eased 0.5 per cent to US$26.45 per ounce and platinum slipped 0.2 per cent to US$1,211.32.

REUTERS