Gold slips as rising yields, stronger dollar weigh

[BENGALURU]

Spot gold was down 0.3 per cent to US$1,907.66 per ounce by 6.10am GMT, but was up 0.5 per cent so far this week. US gold futures shed 0.3 per cent to US$1,908.80.

"In the short term, we just seem to lack a catalyst to drive prices higher," said IG Market analyst Kyle Rodda.

"The effect of (fiscal stimulus hopes) has driven up inflation expectations, (but) we're starting to see nominal bond yields climb as well, which is reasonably significant for gold."

The benchmark 10-year bond yield scaled a fresh high since March, holding above 1 per cent, and helping the dollar rebound strongly.

A stronger dollar makes bullion more expensive for holders of other currencies, while higher bond yields increase the opportunity cost of holding the non-interest yielding gold.

Democrats' control of the US Senate has fuelled hopes of large stimulus measures and boosted inflation expectations, underpinning gold's appeal as an inflationary-hedge.

But higher inflation expectations and bond yields have also bolstered Federal Reserve officials' hopes that the central bank's new monetary policy approach is taking hold.

"Gold still harbours the potential to reclaim the US$2,000 handle. (But) there appears to be a risk of a pullback in the Fed's asset purchasing programme should a US economic outperformance crystalise in the latter part of the year," said FXTM market analyst Han Tan.

"Another massive yields spike may then trigger the further unwinding of gold's recent gains."

Investors now await US non-farm payrolls data due later in the day to gauge the jobs market's health.

Silver fell 0.5 per cent to US$26.98 an ounce. Platinum dipped 0.2 per cent to US$1,114.11, while palladium eased 0.1 per cent to US$2,417.45.

REUTERS