Gold rises on falling yields, focus shifts to Fed meeting


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Gold prices rose on Friday supported by

a decline in U.S. Treasury yields, however prospects for further

rate hike from the Federal Reserve and a buoyant dollar limited

gains.

Spot gold rose 0.5% to $1,727.09 per ounce by 1215

GMT. Prices on Thursday fell to their lowest level in more than

a year at $1,680.25 before ending 1.3% higher.

Bullion has gained 1.2% so far this week.

U.S. gold futures rose 0.8% to $1,727.00.

“Yields have drifted lower which could support the yellow

metal in the short term,” OANDA analyst Craig Erlam said.

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“If we are moving towards an acceptance of low growth or

recession, gold could build on recent momentum as it may negate

the need for the Fed to be as aggressive as is currently priced

in,” Erlam added.

U.S. 10-year Treasury yields fell to their lowest level in

over two weeks.

Investors now await the U.S. central bank’s July 26-27

policy meeting where it is expected to raise interest rates by

75 basis points to combat stubbornly-high inflation.

The ECB joined global peers in the fight against soaring

inflation as it raised interest rates by more than expected,

despite the euro zone economy suffering from the impact of war

in Ukraine.

Rising U.S. interest rates increase the opportunity cost of

holding non-yielding bullion, while also boosting the dollar,

which again makes gold expensive for overseas buyers.

“Should the central bank disappoint markets with a smaller

rate hike, this could weaken the dollar – offering some

breathing room for gold to fight back,” said Lukman Otunuga,

senior market analyst at FXTM.

Among other precious metals, spot silver was

unchanged at $18.84 per ounce while platinum rose 1% to

$880.00.

Palladium rose 0.5% at $1,902.18.

(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in

Bengaluru; editing by Jason Neely and Elaine Hardcastle)



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