By Swati Verma
(Reuters) -Gold prices stalled on Wednesday, a day after breaching the key $1,900 support level for the first time in 1-1/2 months as U.S. Treasury yields were boosted on expectations the Federal Reserve is not yet finished with its rapid monetary tightening cycle.
Spot gold held its ground at $1,903.70 per ounce by 0317 GMT, while U.S. gold futures were flat at $1,935.40.
Gold on Tuesday dropped to as low as $1,895.50 an ounce, its weakest level since end-June, as benchmark 10-year U.S. Treasury yields hit an almost 10-month high, making them more attractive than non-interest-bearing bullion.
“Gold prices continue to struggle with the relentless rise in real yields lately, along with strength in the U.S. dollar, which seems to be reducing gold’s appeal and driving some shunning among investors,” said Yeap Jun Rong, a market strategist at IG.
Indicating investor sentiment toward bullion, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, extended declines to their lowest since January 2020. No inflows have been reported since late July. [GOL/ETF]
“Economic data out of the U.S. thus far has provided room for rates to be kept high for longer. We have the U.S. retail sales data yesterday pushing back against recession concerns and potentially keeping safe-haven flows at bay,” Jun Rong added.
U.S. retail sales increased more than expected in July, underscoring economy’s resilience despite Fed’s aggressive interest rate hikes to tame inflation..
Later in the day, investors will scan minutes from Fed’s July policy meeting to gauge its upcoming rate strategy.
Minneapolis Fed President Neel Kashkari on Tuesday said that while the U.S. central bank has made some progress in its inflation fight, interest rates may still need to go higher to finish the job.
In other metals, spot silver rose 0.4% to $22.59 an ounce and platinum was steady at $888.75. Palladium gained 0.3% to $1,238.67.
(Reporting by Swati Verma in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)
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Source: The Print
