Gold dips on firm dollar, yields; U.S. inflation data in focus

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Gold prices slipped on Wednesday as the

dollar and U.S. Treasury yields rallied in the run-up to the

last inflation reading before this month’s policy meeting of the

Federal Reserve.

Spot gold fell 0.1% to $1,850.10 per ounce by 1012

GMT, while U.S. gold futures were flat at $1,851.90.

“The sentiment is quite confused and that is leading to this

sideways trading in the markets,” said Saxo Bank analyst Ole

Hansen, adding gold needs to break above the $1,870 price level

to get some fresh momentum.

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“Both the yield and dollar developments are not favorable

(for gold) … but against that we have got the World Bank

downgrade of global growth ringing in the ears.”

The World Bank on Tuesday slashed its 2022 global growth

forecast by nearly a third and warned of rising risk of

stagflation, providing some support to safe-haven gold.

The focus was on U.S. consumer price data due on Friday

which could provide clues on whether the Fed will continue with

its aggressive policy stance in the second half of the year.

The U.S. central bank is widely expected to raise interest

rates at its meeting this month, a prospect that helped the

dollar index rise 0.2% and kept the 10-year U.S. Treasury

yield at the key 3% level.

While gold is viewed as a hedge against inflation and a safe

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asset during political and economic uncertainties, higher

interest rates increase the opportunity cost of holding the

non-yielding asset.

Consumers and businesses are being squeezed by higher

inflation and rising interest rates, casting uncertainty over

the economic outlook, said Clifford Bennett, chief economist at

ACY Securities.

“It may prove very rewarding over the next 1-2 years to be

invested in gold,” he added.

Elsewhere, silver fell 0.8% to $22.02 per ounce,

platinum dipped 0.7% to $1,003.36 and palladium

was 0.8% lower at $1,967.44.

(Reporting by Eileen Soreng and Swati Verma in Bengaluru;

Editing by Aditya Soni)