Gold prised off 1-month high as U.S. bond yields climb

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Gold prices eased on Monday from a

one-month high scaled earlier in the session, as red-hot U.S.

inflation data lifted Treasury yields and tempered the appeal of

safe-haven bullion.

Spot gold was down 0.5% at $1,862.29 per ounce, as of

0205 GMT. U.S. gold futures also eased 0.5% to $1,866.80.

Gold, which is seen as a safe-haven asset in times of

economic crises, hit its highest since May 9 earlier in the

session at $1,877.05 per ounce.

However, benchmark U.S. 10-year Treasury yields

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also rose to their highest since May 9, weighing on demand for

zero-yield gold.

“The fact that gold disconnected itself from moving

inversely to the U.S. dollar suggests to me that markets are

belatedly moving into a much more vigorous risk aversion mode

(due to the inflation data),” OANDA senior analyst Jeffrey

Halley said.

U.S. consumer prices accelerated in May, suggesting that the

country’s central bank could continue with its 50-basis-points

interest rate hikes through September to combat inflation.

“The data delivered an unsympathetic wakeup call to

financial markets that inflation remains both entrenched and has

real upside risks. Gold is benefiting from a swing to defensive

haven positioning as equities and cryptos get hammered,” Halley

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Asian stocks sank on Monday on worries of a further

aggressive Federal Reserve policy tightening, while a COVID-19

warning from Beijing added to concerns about global growth.

It’s a central bank-heavy week ahead, with the Fed expected

to deliver its second straight half-point rate hike to bring

inflation under control.

Bullion is often seen as an inflation hedge, but the

opportunity cost of holding it is higher when the Fed raises

short-term interest rates, as gold yields no interest.

Spot silver dipped 1.1% to $21.63 per ounce, platinum

fell 1.5% to $958.51, and palladium dropped 2.1%

to $1,894.72.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Rashmi Aich and Sherry Jacob-Phillips)



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