Gold hovers near 2-week peak as dollar, US bond yields weaken

GOLD prices hovered near a 2-week high on Wednesday (May 25), buoyed by a pullback in US Treasury yields and the dollar, with downbeat sentiment in riskier assets adding to safe-haven bullion's appeal.

Spot gold held its ground at US$1,865.39 per ounce, as of 12.42 am GMT. US gold futures were also steady at US$1,864.80.

Gold prices rose to their highest level since May 9 of US$1,869.49 on Tuesday, as the safe-haven metal's appeal was lifted by a weaker US dollar and lower Treasury yields amid subdued risk appetite in financial markets.

The dollar steadied after hitting its lowest level in a month in the previous session. A weaker dollar makes bullion less expensive for buyers holding other currencies.

Shares slid worldwide on Tuesday as supply chain woes and surging costs hurt corporate earnings and manufacturing output slowed, while Treasury yields dipped as the weakness in equities revived a safe-haven bid for US government debt.

As the Federal Reserve amps up its fight against 40-year-high inflation with what is expected to be a string of big interest-rate increases, one US central banker injected a note of caution, warning headlong rate hikes could create "significant economic dislocation".

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Higher short-term US interest rates raise the opportunity cost of holding bullion, which yields nothing.

European Central Bank president Christine Lagarde said on Tuesday she saw the ECB's deposit rate at zero or "slightly above" by the end of September, implying an increase of at least 50 basis points from its current level.

Spot silver dipped 0.1 per cent to US$22.07 per ounce, while platinum gained 0.2 per cent to US$955.75, while palladium edged 0.2 per cent lower to US$2,002.66. REUTERS