Gold prices edges up on inflation bets as Fed meeting looms

edged higher on Monday on prospects of higher inflation following the approval of a $1.9 trillion U.S. stimulus bill, although elevated U.S. Treasury yields capped bullion’s gains ahead of a meeting.

Spot was up 0.2% at $1,729.12 per ounce by 1014 GMT. U.S. futures rose 0.4% to $1,727.70.

“The strength shown by gold could be hinting that prices are close to bottoming out on a longer-term basis, if gold’s role as an inflation hedge is creeping back into investors thoughts. We will have a clearer picture by the end of the week,” OANDA senior market analyst Jeffrey Halley said.

“Overall, seem to be hanging in there despite U.S. yield and dollar strength. Gold could test resistance at $1,740.”

President Joe Biden signed the $1.9 trillion stimulus bill into law last week.

Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields dull some of the appeal of the non-yielding commodity.

Benchmark U.S. Treasury yields were at their highest in more than a year, while the dollar rose for a second straight session.

Investors are now awaiting a two-day U.S. meeting this week for policymakers’ remarks on a recent spike in bond yields, fears about rising inflation and the economic outlook.

The Bank of England and Bank of Japan also have meetings on Thursday and Friday this week.

“A strong show of dovish intent by (Fed Chair) Powell and team could send Treasury yields lower and lift higher,” Howie Lee, an economist at OCBC Bank wrote in a note.

In other metals, silver gained 0.6% to $26.07 an ounce. Palladium edged 0.1% higher to $2,374.17 and platinum rose 0.7% to $1,213.22.


(Reporting by Brijesh Patel in Bengaluru; Editing by Jan Harvey)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link