Gold prices flat as firmer US yields hurt appeal

[BENGALURU] Gold prices were flat on Tuesday (Jan 18) as a weaker dollar partially offset pressure from elevated US Treasury yields, which dim the appeal of a non-yielding bullion.

Spot gold held its ground at US$1,818.87 per ounce, as of 12.22 am GMT. US gold futures edged up 0.1 per cent to US$1,818.50.

Treasury yields rose along the curve on Tuesday, lifting the short end to new pandemic highs on rate hike expectations.

The focus is now on the US Federal Reserve's Jan 25-26 meeting after policymakers signalled that they would start raising interest rates in March to tame inflation.

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

The US dollar slightly weakened, and was close its lowest level in 2 months, making greenback-priced gold more attractive for overseas buyers.

The Bank of Japan is expected to upgrade its inflation forecast on Tuesday and acknowledge budding signs of change in the country's deflationary mindset, as stubbornly high global commodity costs prompt more firms to raise prices.

Australian consumer confidence took a battering last week as an explosion in coronavirus cases triggered self-imposed lockdowns, squashing spending and blowing holes in supply chains.

The global job market will take longer to recover than previously thought, with unemployment set to remain above pre-Covid-19 levels until at least 2023 due to uncertainty about the pandemic's course and duration, the International Labour Organization said in a report on Monday.

Spot silver was up 0.1 per cent at US$23.02 an ounce, platinum rose 0.3 per cent to US$974.43, and palladium was flat at US$1,874.66.

REUTERS