By Kavya Guduru
(Reuters) – Gold prices fell on Thursday as elevated U.S. Treasury yields and a firm dollar dimmed bullion’s appeal in the run-up to U.S. inflation data that could strengthen the case for aggressive policy tightening by the Federal Reserve.
Spot gold was down 0.3% at $1,848.49 per ounce by 1:57 p.m. EDT (1757 GMT), while U.S. gold futures fell 0.2% to $1,852.80.
“The ECB signalled they’re going to start raising rates in July and continue to raise rates. It has gold trading a little lower … Feels like there’s some risk off in the markets that’s spilling over into gold too, plus the bond yields are up a little bit,” said Bob Haberkorn, senior market strategist at RJO Futures.
The ECB said it will end bond buys on July 1 and raise rates by 25 basis points later in the month. It will hike again in September and may opt for a bigger move then, if the inflation outlook fails to improve.
U.S. yields rose, increasing the opportunity cost of holding non-yielding gold, while the dollar firmed, making gold less appealing for overseas buyers. [US/][USD/]
“Tomorrow’s inflation print has gathered substantial attention, but with the next few Fed hikes set in stone, the immediate relevance of data releases is limited,” TD Securities wrote in a note.
“Instead, market participants will be honed-in on any information that could inform the Fed’s decision-making process post-September.”
The core consumer price index (CPI) is expected to have risen 5.9% on the year, after an annual rise of 6.2% in April, according to a Reuters poll.
The CPI data due Friday could offer clues on whether the Fed will continue its aggressive tightening in the second half of the year.
Spot silver slipped 1.2% to $21.76 per ounce, platinum dropped 3.2% to $973.59, while palladium fell 1% to $1,924.02.
(Reporting by Kavya Guduru in Bengaluru; Editing by Vinay Dwivedi)
