By Asha Sistla
(Reuters) – Gold eased on Thursday after the dollar strengthened and yields rose as investors geared up for U.S. interest rate hikes, but safe-haven demand triggered by the Ukraine crisis and mounting inflation kept bullion on track to post a weekly gain.
Spot gold XAU= fell 0.5% to $1,967.91 per ounce by 11:12 a.m. ET (1512 GMT).
U.S. gold futures GCv1 dropped 0.6% to $1,973.30.
While central banks world-over are racing to tame surging inflation, the ECB on Thursday stuck to its plans to dial back stimulus this year, a move seen as less aggressive in the face of soaring inflation. (Full Story)
“You’ve had a dovish surprise from the European Central Bank, which is really providing strength here for the dollar. So gold is getting hit hard here,” said Edward Moya, a senior analyst with OANDA.
The dollar rose .DXY rose 0.7%, making bullion expensive for overseas buyers. USD/
Also hitting gold on the day, the benchmark 10-year U.S. Treasury yield rose. US/
Although gold is considered a hedge against inflation and geopolitical risks, interest rate hikes raise the opportunity cost of holding non-yielding bullion.
New York Fed President John Williams said the central bank should consider raising rates by a half percentage point at its next meeting in May. (Full Story)
However, gold was still headed for a second straight weekly gain, up about 1.2% thus far.
“Russia appears to be preparing to launch a major offensive in the east of the country (Ukraine) – that is generating considerable demand for gold as a safe haven,” Commerzbank analyst Daniel Briesemann said in a note.(Full Story) GOL/ETF
Spot silver XAG= was down 1.2% to $25.41 per ounce, platinum XPT= fell nearly 1% to $977.02, while palladium XPD= rose 1.6% to $2,351.47.
(Reporting by Asha Sistla and additional reporting by Bharat Govind Gautam in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)
