Gold Down, Supported by Lower U.S. Yields but Pressured by Strengthening Dollar
2022.06.02 07:31
By Gina Lee
Investing.com – Gold was down on Thursday morning in Asia, with the yellow metal caught between support from slightly lower U.S. Treasury yields and pressure from a firm dollar.
Gold futures inched down 0.08% to $1,847.15 by 12:03 AM ET (4:03 AM GMT) and has been trading in a narrow range between $1,828 and $1,864, for about a week, remaining around $1,850 overall.
Prices are consolidating now, GoldSilver Central MD Brian Lan said, adding that trading in this range could continue with some investors sitting on the sidelines due to an absence of major news.
Investors are also awaiting gold’s reaction to Shanghai’s lifting of lockdowns. While there could be pent-up demand on the physical side, institutions holding large amounts of gold may liquidate to raise funds, according to Lan.
Benchmark U.S. 10-year Treasury yields fell and the dollar, which normally moves inversely to gold, inched up on Thursday. The greenback steadied after hitting a more than one-week peak on Wednesday.
“A hawkish Fed (U.S. Federal Reserve), higher real rates, and what still remain anchored medium-term inflation expectations have weighed on gold price momentum amid a relatively robust dollar backdrop,” Citi Research said in a note.
“It also seems likely some geopolitical risk premium has eroded as the market absorbed the Russia/Ukraine conflict. On the other hand, elevated asset market volatility, a potential return of the central bank gold bid, and ‘stagflation’ tail hedges have likely buttressed $1,800 support,” the note added.
The Bank of Canada raised its overnight rate by a half percentage point to 1.5%.
In other precious metals, silver inched down 0.1%, platinum fell 0.7%, and palladium edged up 0.2%.
