Gold prices muted as Fed minutes fail to surprise

GOLD prices were flat on Thursday (May 26), restrained by rising Treasury yields, after its appeal was somewhat restored by minutes from a US Federal Reserve policy meet that showed the central bank was likely to stay the course on interest rate hikes.

Spot gold held its ground at US$1,852.27 per ounce, as of 12.57 am GMT. US gold futures gained 0.3 per cent to US$1,852.30.

Gold pared some dollar strength-driven losses on Wednesday after notes from the Fed's meet suggested the central bank would stick to hiking interest rates by 50 basis points in June and July to combat inflation they agreed had become a key threat to the economy's performance.

Wall Street ended higher as investors were heartened by the fact that Fed policymakers unanimously felt the US economy was very strong as they grappled with reining in inflation without triggering a recession.

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

The dollar index edged lower, making bullion less expensive for buyers holding other currencies, and limiting losses.

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European Central Bank president Christine Lagarde gained key allies for her plan to raise rates out of negative territory this summer, even as one of her own board members on Wednesday expressed some scepticism about the policy path ahead.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.2 per cent to 1,069.81 tonnes on Wednesday from 1,068.07 tonnes in the prior day.

Spot silver dipped 0.3 per cent to US$21.91 per ounce, while platinum gained 0.6 per cent to US$948.93, and palladium rose 0.3 per cent to US$2,011.96. REUTERS