Gold slips as bets on Fed rate hike boost yields ahead of US data

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  • 10-Year U.S. Treasury Yields Near Nearly 2-Year Highs
  • Spot Gold May Test Resistance at $ 1,801 / oz – Technical Info

Jan. 10 (Reuters) – Gold prices eased on Monday as traders waited for December’s US inflation data that could underscore the need for an interest rate hike earlier than forecast by the Federal Reserve.

Spot gold was down 0.2% to $ 1,792.43 an ounce at 0632 GMT, after hitting its lowest level since Dec. 16 at $ 1,782.10 on Friday. US gold futures fell 0.3% to $ 1,791.20.

“People are happy to bid on gold a little lower. The market is still kind of down due to the high yields at the end of last week’s close,” said Nicholas Frappell, director. ABC Global General. Ingots.

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U.S. Treasury yields surged last week after the Fed minutes suggested the possibility the central bank could reduce its balance sheet sooner than expected.

Gold is seen as a hedge against higher inflation, but the metal is very sensitive to rising US interest rates, which increases the opportunity cost of holding unproductive bullion.

Fed funds futures have valued an almost 90% chance of a rate hike in March and a more than 90% chance of another by June.

“If the inflation data is a little higher than expected, that will only confirm people’s expectations (of aggressive Fed tightening). You could see a slight drop in real yields, which would be positive for the ‘gold,’ Frappell said.

U.S. inflation data is due later this week, with December’s core CPI expected to rise 5.4% annually after rising 4.9% the month before.

Spot gold could test resistance at $ 1,801 an ounce, a break above that could lead to a gain in the $ 1,815- $ 1,830 range, according to Reuters technical analyst Wang Tao.

Spot silver was down 0.4% to $ 22.21 an ounce, platinum was little changed at $ 954.05 and palladium fell 0.4% to $ 1,926.41.

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Reporting by Asha Sistla in Bangalore; Editing by Sherry Jacob-Phillips and Rashmi Aich

Our Standards: Thomson Reuters Trust Principles.

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