PRECIOUS-Gold prices ease on uptick in U.S. Treasury yields

  • 9/27/2021
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* 10-year Treasury yields hit a peak since early-July * PBOC liquidity injections support gold - analyst (Updates prices) Sept 27 (Reuters) - Gold prices were subdued on Monday, pressured by an uptick in U.S. bond yields and a robust dollar, as investors awaited speeches from Federal Reserve policymakers for clues on when the central bank could taper its pandemic-era economic support. Spot gold was down 0.1% at $1,747.99 per ounce by 1158 GMT. U.S. gold futures eased 0.2% to $1,748.90. Denting gold’s appeal by raising its opportunity cost, benchmark 10-year U.S. Treasury yields rose to their highest level in nearly three months. The dollar also strengthened, adding further pressure. “Gold seems to be in an extended period of doldrums and is unable to shake itself either way, with firmer 10-year Treasury yields and a robust dollar acting as headwinds,” independent analyst Ross Norman said. Market focus will now be on speeches by Fed officials this week including Chair Jerome Powell, who will testify before Congress on the central bank’s policy response to the pandemic. Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest. Norman said that while central bank buying was “encouraging” to the market, bullion lacked “quality” institutional flows, particularly from North America. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were marginally higher on Friday after hitting a more than one-year low earlier last week. Investors were also keeping an eye on developments surrounding debt-laden China Evergrande, after the Chinese property giant missed a bond payment deadline last week. The People’s Bank of China continues to inject liquidity into markets, indicating some systemic risks in the market, and providing some support to bullion, said Stephen Innes, managing partner at SPI Asset Management. Silver rose 0.6% to $22.55 per ounce. Platinum climbed 0.5% to $987.17, while palladium gained 0.9% to $1,989.73.

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