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PRECIOUS-Gold dips as Treasury yields rise before U.S. inflation data release

reuters.com · 06/09/2022 23:29
PRECIOUS-Gold dips as Treasury yields rise before U.S. inflation data release

U.S. CPI due at 1230 GMT

Precious metals face weekly decline

Adds comments an details, updates prices

By Bharat Gautam

- Gold edged down on Friday and was set for a weekly fall, as Treasury yields rose, with investors awaiting key monthly U.S. inflation data for cues on the future of the Federal Reserve's monetary policy.

Spot gold XAU= eased 0.2% to $1,844.78 per ounce, as of 0311 GMT, while U.S. gold futures GCv1 eased 0.3% to $1,848.10.

Benchmark U.S. 10-year Treasury yields US10YT=RR edged up, hurting demand for zero-yield gold. US/

U.S. consumer price index (CPI) data expected later in the day has market participants anxiously waiting for confirmation that decades-high inflation peaked in March. nL1N2XW1WK

"The market is very much in consolidation mode this week ahead of tonight's key U.S. CPI, which could significantly influence the Federal Reserve beyond September," said Stephen Innes, managing partner at SPI Asset Management.

Gold prices have fallen about 0.3% this week.

A robust CPI reading could signal a more aggressive Fed and see bullion prices test $1,825 and push gold to as low as $1,800, but a benign print could have the opposite effect, Innes said.

The Fed will hike its key interest rate by 50 basis points in June and July, with rising chances of a similar move in September, according to a Reuters poll of economists who see no pause in rate rises until next year. nL4N2XV2G3

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 to combat inflation.

"Hawkish central banks, rising real rates and a stronger U.S. dollar have taken the shine off the gold market. Withdrawal of unprecedented fiscal and monetary support is also weighing on sentiment," ANZ Research said in a note. nL1N2XW0AB USD/

Spot silver XAG= dipped 0.1% to $21.63 per ounce, and platinum XPT= fell 0.6% to $966.13, while palladium XPD= rose 0.7% to $1,938.01. All are on course for weekly declines.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)

((BharatGovind.Gautam@thomsonreuters.com; +91-80-6182-3021/ 3590 (If within U.S. call 651-848-5832 );))