Gold flat on firmer dollar, U.S. bond yields

The dollar index steadied, hanging on to an overnight jump made with U.S. yields as investors hoped early signs the omicron variant may be mild will be proved correct.

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New York: Gold prices were flat on Tuesday, as a firmer dollar and U.S. Treasury yields weighed on its appeal and confined the metal to a tight $4 range.

Spot gold was little changed at $1,778.79 per ounce by 0130 GMT. U.S. gold futures were flat at $1,780.00.

The dollar index steadied, hanging on to an overnight jump made with U.S. yields as investors hoped early signs the omicron variant may be mild will be proved correct.

A stronger dollar raises gold’s costs to buyers holding other currencies, while higher yields increase bullion’s opportunity cost.

Bank of England Deputy Governor Ben Broadbent said on Monday that inflation in Britain might “comfortably exceed” 5% in April and that the country’s tight labor market risked becoming a more persistent source of inflation.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

Financial markets, which have struggled this year to decipher central bankers’ policy signals, face their biggest challenge yet in December when in the space of 24 hours the Federal Reserve, ECB and Bank of England hold crucial meetings.

Euro zone finance ministers remained upbeat on Monday about economic growth prospects despite the omicron coronavirus variant, and they agreed to continue moderately supportive fiscal policy next year.

The Perth Mint’s sales of gold products in November jumped about 94% from the previous month to an eight-month peak, the refiner said on Monday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell about 0.2% to 982.64 tons on Monday from 984.38 tons on Friday.

Spot silver fell 0.2% to $22.31 an ounce. Platinum was steady at $938.00 and palladium dropped 0.3% to $1,849.19.

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