Gold eases as yields gain on Fed rate hike bets

BENGALURU (Jan 17): Gold prices eased on Monday (Jan 17) as US Treasury yields gained on hawkish signals from the US Federal Reserve (Fed) and markets began to price in a sooner-than-anticipated reduction in balance sheet.

Spot gold was down 0.2% to US$1,814.08 (about RM7,599.18) per ounce by 0024 GMT. US gold futures edged down 0.1% at US$1,815.00.

US 10-year Treasury yields hovered near two-year highs hit in the previous week.

Fed chair Jerome Powell said last week that the US economy is ready for the start of tighter monetary policy, while other Fed officials also signalled that the Fed is getting ready to start raising interest rates in March.

Gold is considered an inflationary hedge, but the metal is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.

Bank of Japan policymakers are debating how soon they can start telegraphing an eventual interest rate hike in a meeting this week.

Data out of China due on Monday is expected to show retail sales and industrial output slowed further in December.

Physical gold buying faltered in India last week as prices climbed and rising coronavirus cases prompted consumers to postpone purchases, while demand in top consumer China stabilised as Lunar New Year festivities approached.

Spot silver shed 0.3% to US$22.89 an ounce, platinum was down 0.3% to US$967.33 and palladium fell 0.4% to US$1,871.50.