Gold steady as dollar dip counters higher bond yields

GOLD steadied on Wednesday (Jul 20) as a pullback in the US dollar balanced pressure from rising bond yields, with investors awaiting key interest rate hike decisions from major central banks, which could present a clearer outlook for bullion.

Spot gold was little changed at US$1,711.36 per ounce by 12.59 am GMT. US gold futures fell 0.1 per cent to US$1,709.20.

The dollar dipped for a fourth straight session, albeit at elevated levels, making greenback-priced bullion less expensive for buyers holding other currencies.

Benchmark US 10-year Treasury yields rose, staying above the 3 per cent mark, lowering the appeal of non-yielding bullion.

A global gauge of stocks notched its biggest 1-day percentage gain in nearly a month on Tuesday, as expectations grew for the European Central Bank to enact a bigger rate hike than expected this week.

European Central Bank policymakers are considering raising interest rates by 50 basis points at their meeting on Thursday to tame record-high inflation, 2 sources with direct knowledge of the discussion told Reuters.

Although gold is seen as an inflation hedge, higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest.

Australia's top central banker on Wednesday indicated a steady drum beat of interest rate rises were needed to stop a damaging inflationary cycle developing, and suggested rates could at least double from current low levels.

Switzerland imported 284 kg of gold worth around US$16 million from Russia in June, customs data showed on Tuesday, down from more than 3 tonnes worth some US$200 million in May.

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Gold subdued as firmer US dollar, yields dent appeal

Spot silver firmed 0.3 per cent to US$18.79 per ounce, platinum rose 0.3 per cent to US$877.00, and palladium climbed 1.6 per cent to US$1,905.50. REUTERS